The Best Time to Buy a Home: When You’re Ready

by Karen Lawson
March 5th, 2010

With fluctuating mortgage rates, concerns about the economy and job security, and stricter lending requirements, it can be difficult to decide when to buy a home. Recent reports indicate that sales of existing homes have fallen, and that unemployment rates, although stable, remains near 10%. These factors  promote favorable opportunities for buyers as sellers face more competition with fewer buyers shopping for homes.

FHA Loans Helpful for First Time Buyers

Buying your first home is a big decision, and typically requires significant cash outlay for a down payment and closing costs. The Federal Housing Administration (FHA) is the major source of mortgage loans for borrowers with little cash. FHA Loans offer first time buyers several benefits:

Low down payment requirements: As conventional mortgage lenders have tightened credit requirements and increased down payment requirements to 20 to 20%, first time buyers are more frequently priced out of the market. FHA provides buyers a minimum down payment of 3.5% and can also assist with closing costs by allowing up to 3% of your closing costs to be paid by the seller, or by allowing your lender to pay closing costs in exchange for a higher mortgage rate.

Flexible credit requirements: FHA guidelines for approving mortgage loans are largely based on proving that borrowers have the capacity to make mortgage payments. Although recent changes to FHA requirements will soon require a minimum FICO score of 580 to qualify for the minimum down payment, FHA does not focus on credit scores alone. If you’re facing credit challenges, FHA mortgage loans can help.

Specialized home loan programs: Contact approved FHA mortgage lenders to learn more about specialized programs for certain public service workers, and for those wishing to buy and rehab homes. FHA works with state and local housing agencies and community development programs to provide incentives for buying and rehabilitating homes.

Refinance Your Mortgage with an FHA Loan

FHA loans are also available for homeowners seeking refinancing. Homeowners struggling to refinances after their home value declined may find a solution with an FHA mortgage refinance. FHA offers higher loan-to-value refinance terms than conventional lenders, and may also help with rolling home equity loans into a new mortgage loan.  Your mortgage balance(s), current home value, and other factors impact how much you can borrow with an FHA mortgage loan, but in general, FHA offers a bit more “wiggle room” with its higher loan-to-value (LTV) allowances. Getting several mortgage quotes can help you identify refinancing options matchng  your circumstances.

Mortgage Loans: Ready, or Not?

Although friends and family may pressure you to jump into buying your first home, it’s important to be comfortable with your finances and reasonably confident of your ability to make mortgage payments. if you’re planning to stay put for a few years and want to own your own place, FHA mortgage loan programs can help with achieving your goals. Discussing your plans with an FHA housing counselor and a financial advisor can help with determining when to buy a home.

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