A lot of first-time homebuyers in Georgia choose FHA loans as their financing choice. This mortgage program takes the budget difficulties of the homeowners while still giving benefits. FHA loans do not require a large down payment, so it can be easier for prospective homeowners.
The benefits of an FHA loan include:
Low Down Payment
FHA loans are powered by the federal government, so there are minimal costs required in the process. The financial commitment that will be asked from you is usually at about 3.5 percent assuming you have an excellent credit score.
No Cash Reserve Requirements
Unlike other types of home loans, an FHA home loan does not require cash reserves, which will not overwhelm first-time home buyers.
Easy to Qualify
Compared to loans with higher standards and requirements, prequalifying for an FHA loan is fairly straightforward. Since the government will insure the loan on your behalf, lending institutions and creditors will not make borrowers experience hurdles and challenges. At the most, you will be required to provide proof of income, employment history, and credit history.
It also allows individuals with lower credit scores to qualify, but this may change certain aspects of the loan offered.
The Requirements
Here are some FHA loan requirements you should remember to qualify for a housing loan:
Have a Spotless Credit History
You have to make sure that your source of income, creditworthiness, and rent history are all unassailable. Your credit score must be high enough to seem attractive and trustworthy to mortgage lenders. Fix any minor issues that can damage your consumer credit, as this may decrease your chance of getting an FHA loan.
You must also prove that you have at least two years of continual employment without any unknown job history breaks.
Maintain a High Credit Score
Suppose you have filed for bankruptcy or foreclosure before. In that case, it is best to show that you have maintained a perfect credit score 4 or 5 years before you apply for an FHA application. Also, make sure that your FICO score is 600 or higher to get the 3.5 percent down payment for the FHA. The lower your credit score, the higher your down payment percentage might be as well.
Keep Financial Debt to a Minimum
You should take care in increasing your debt load. Anything greater than 41 to 45 percent is sure to diminish your chances of getting an FHA loan with favorable terms.
How the Process Goes
Now, here is a brief description of the FHA mortgage application process flow.
- First, you will have to accomplish a short Information request form to allow an FHA mortgage professional to discuss your goal. A complete mortgage application will contain all your details to determine whether you qualify or not. The interest rate and loan terms will also depend on the form.
- Once pre-approved, the disclosure records will then be given to you. This contains the terms, conditions, loan rates, cost, and installment payments of the FHA loan.
- After it is agreed upon, you must submit it along with your bank account statements, IDs, and other requirements for validation. Be sure to prepare such documents beforehand.
- The application will be double-checked, and you will be asked to submit some documents you may have missed.
- Once completed, the underwriter will receive it and send a Conditions List.
- Once you have accomplished everything needed on the Conditions List, it will be given to the mortgage lender for final authorization. After a closing date is scheduled, you will be given the mortgage loan.
Final Thoughts
The FHA mortgage program is very beneficial and buyer-friendly. Some of its benefits are secured fixed loan interest rates, simple qualification processes, and adjustable-rate options. It is a mortgage program that helps first-time buyers in Georgia and many other states afford to buy their own homes.
If you are interested in applying for the FHA loan, do not hesitate to contact PENNIX Mortgage for more details. Our team will make sure you get an FHA home loan with the lowest mortgage rates to secure a good deal.
