Getting an FHA loans near me Fairbanks AK can be a great way to get the home of your dreams. However, you may have some concerns about whether or not you’re able to qualify. This is why it’s important to know what you’re getting yourself into.
Upfront mortgage insurance premiums
When you get a FHA loan, you will be charged an upfront mortgage insurance premium. This is a fee paid when the loan is originated and is included in the total loan amount. The amount of this upfront premium varies based on the size of the loan, the down payment, and the term of the loan.
Upfront mortgage insurance premiums can help protect lenders against losses. In fact, they may be tax-deductible. But the cost of this premium can be prohibitive for some home buyers. Fortunately, borrowers who get a FHA mortgage can find ways to pay for this premium.
The FHA is a government-backed organization that insures loans against loss. It is designed to help borrowers who cannot afford conventional loans. Homeowners with FHA loans near me Juneau AK finalized before June 2013 are eligible for a refund of the up-front premium after five years. Those who refinance into another FHA loan within three years of closing on the original loan are also eligible for a refund of this premium.
High debt-to-income ratio
A high debt-to-income ratio can make it difficult for you to qualify for a mortgage. But there are ways to lower it. By making your budget more realistic, you can eliminate some of the expenses you don’t need. And you can apply for loan forgiveness programs that will help you get rid of some of your debt.
Debt-to-income ratios are one of the most important factors lenders look at when deciding whether you qualify for a home loan. It’s also one of the most powerful indicators of your financial health.
To calculate the debt-to-income ratio, the lender uses a formula to determine how much of your monthly income you spend on debt. This includes your housing expenses, credit card payments, and student loans. The total should not be more than four-thirds of your pre-tax monthly income.
There are two types of debt-to-income ratios: the front-end and the back-end. For the front end, you need to calculate how much of your monthly income you spend on your mortgage, property taxes, and homeowners association fees.
Stricter property standards
When you apply for an FHA loan, you have to pass a property inspection. This is done to make sure the home meets the minimum property standards. These standards are designed to protect both the lender and the borrower.
A property that does not meet the minimum property standards is not insured by FHA. That’s because the Federal Housing Administration wants to ensure that your home is structurally sound.
Those standards include the ability to provide adequate heating and cooling, sanitary facilities, and independent utilities. In addition, the home must be free of health hazards and safety hazards. Besides, it must be able to provide you with clean and safe drinking water.
The FHA minimum property standards also make sure that your house is move-in ready. It’s important to know these guidelines, as they can help you save money and avoid costly repairs.
Another FHA requirement is that your house have proper grading. Grading prevents water from ponding and damaging your home. Also, your home must be free of termites and mold.
Closing costs
Closing costs of a FHA loan vary by location, lender, and borrower. But they are generally similar to those of conventional mortgages. Many borrowers have closing costs added to their loan amount, but some have them rolled into the interest rate. Some lenders offer help with closing costs to first-time homeowners, and some housing finance agencies have programs that give gifts to homebuyers.
One of the largest components of closing costs is transfer taxes. All but 13 states charge a tax when ownership of a property transfers. The tax can be as high as $200 or more. If the seller doesn’t pay them, the buyer may be required to make a contribution to cover the costs.
Another component of closing costs is the FHA mortgage insurance premium. It’s a fee that’s 1.75% of the total loan amount. This is paid at closing, and it’s not included in the minimum down payment required by the FHA.
Homebuyers can also expect to pay for the appraisal of the house. An FHA-approved appraiser will determine the value of the property. Most lenders require an appraisal. Usually, the average cost of an appraisal is $300 to $500.
