Generally, home buyers apply for a mortgage loan to purchase Paradise Valley homes for sale. However, it is very important to first learn about the loan criteria set by the Federal Housing Authority or FHA that you have to meet, as well as the rights of loan borrowers before you enter any loan agreements.
Not all the aspects of the criteria are set by the FHA; some are set by mortgage lenders as FHA doesn’t directly loan money to borrowers, but most of the requirements are from the agency.
FHA Loan Requirements
For your loan application to be approved by the FHA, you are required to have a credit score of over 550 and you must not have any records of late payments. Also, you have to show a proof that in two years time, you have paid promptly without any judgments or collections.
You also need to provide evidence of at least a down payment that extends from 3% up to 5%. Your loan application will be denied if you fail to meet the requirement.
In addition to the down payment, you need to possess liquid assets, such as bonds, stocks, money market funds, and short-term certificates, that has the same value as two months worth of mortgage payments. You must prove this by means of bank statements.
As a borrower, you are not allowed to go beyond 40% of your income in debit, which includes student loans, car payments, credit card payments, and any other kinds of debts that recur every month.
If you are planning to buy a home that is worth more than $300,000, then you’re not eligible for the FHA program as it has a certain loan limit that is subject to change.
Even though these requirements are strict, there are some considerations. If you don’t have the required amount of liquid assets, then you can ask for help from a close family member of yours and have them pay for the minimum deposit as a gift for you. This is quite common, but it must come with a gift letter.
As a mortgage borrower, you must understand your rights, including:
– It is your right to be aware of how much the loan costs in total. This includes the rate of interest, points, as well as other expenses.
– It is your right to go and search for the best loan available. You should compare what the various lenders and brokers are offering.
– It is your right to know the fees that can’t be refunded if you suddenly make a decision to cancel the loan.
– It is your right to demand a Good Faith Estimate of the settlement and loan charges before you decide to agree to the deal and pay any charges.
– It is your right to know how much you and the lender are paying the broker for your loan.
– It is your right to request for an explanation from the broker about what he will exactly do for you.
– It is your right to not be discriminated based on your national origin, sex, marital status, religion, race, color, or age and receive a fair credit decision.
– It is your right to ask about anything related to the mortgage loan, such as the terms and charges, that you do not fully comprehend.
– It is your right to understand the reason of the rejection if your application gets turned down.
If you understand these requirements and your rights, it would be easier for you to own the Paradise Valley real estate that you’ve always wanted.