By Dez Duran-Lamanilao

The Federal Housing Administration (FHA) loans allow prospective homeowners to purchase homes with low costs and down payments at easy credit-qualifying criteria. Those aged 62 years or older and live in their homes may be qualified for the FHA Reverse Mortgage, which allows homeowners to convert a portion of their equity into cash.

Here are a few things to keep in mind when planning to avail of an FHA loan:

  • The most popular FHA loan is the 203(b) fixed rate loan, especially if you are a first-time buyer. Advantages include minimum down payment and less closing costs.
  • An adjustable rate loan, on the other hand, will require careful planning with your lender with regard to the index, the measurement of how the interest rate changes, as sometimes it may be difficult to predict when or how much the rate may change.
  • Ask your lender about appraisal fees, inspection fees, and other charges that may be incurred in the processing of your application.
  • Avoid getting involved in any major credit purchase so as not to impact your debt-to-income ratio, which may result to the rejection of the loan.
  • To avoid foreclosure due to delinquency, FHA may allow the owner to sell the property for an amount less than the amount needed to pay off the loan. You need to get in touch with your counseling agency and/or lender to find out if you are eligible to apply.

FHA guidelines are available to the public to help you understand the terms and conditions better. Having a clear grasp of everything will ensure that you do not fall victim to dishonest sellers and lenders. FHA even offers grant programs that could apply to your current condition.

Get in touch with an experienced counselor if you need further advice on housing loans and mortgages. Since FHA will be the insurer of your mortgage, an expert can evaluate your qualifications to confirm what you can afford, thus avoiding the common pitfalls associated with home loans.