Gil Garnett's Blog
When you’re ready to buy a home, there’s an anxious excitement that’s within you, making you feel like a small child on Christmas night. One question that is probably burned in your mind throughout the home search process is, “How long is this going to take?”
If you’re a first-time home buyer, you’ll likely be using some programs through the Federal Housing Administration, also known as the FHA. With any kind of home loan, there’s many variables that can affect how long the process will take. This can be due to many factors including the seller’s circumstances and the nature of your loan.
When you’re securing a home loan backed by the FHA, you may wonder how long it’s going to take for the entire process to finish from beginning to end.
Variables That Affect The Loan Process
This is one of the variables that can fluctuate the most in the home loan process. Once you have found the home that you love, the lending process can take a few weeks beyond the point where you sign a contract. This part could entail many different steps that may become hurdles for you as a borrower. Your loan officer can also have an impact on the length of the process. Some loan people are just faster than others!
Keep in mind that you can’t close on an FHA loan until you get through the underwriting process. In the underwriting process for an FHA loan, it will be assured that you meet all of the criteria necessary for securing the loan, such as the standards that have been established by the HUD (Department Of Housing and Urban Development).
Closing On An FHA Loan
While it’s difficult to say the exact amount of time that it will take for a loan to process, there’s some things you can do ahead of time to prepare. If you apply for an FHA loan before you have even found a home, you’ll expedite the process a bit. If you have been pre-approved prior to making an offer on a home, you’ll likely be in a better position than if you haven’t yet met with a lender. This will also make the underwriting process move a bit faster for you, provided there aren’t any major red flags on your paperwork.
FHA appraisals do differ a bit from appraisals for a home with a more conventional loan. With an FHA appraisal, the appraiser must look for things in two main areas including any health and safety issues and determine the market value of the property as well. This process will most likely only take a few days. Part of the appraisal process may include the appraiser looking at similar properties in the area in order to get a bit of a comparison on the value of the property.
Can You Speed It Up?
If you have everything in order before you even decide that you’re ready to go on the house hunt, you’ll discover that the process of securing an FHA loan will be a bit smoother. Talk to a lender before you start the process so you can familiarize yourself with the requirements. Once you can present the lender with the right documents, they’ll be able to do their job with little intervention on your part.
It’s hard to overstate the importance of credit scores when it comes to buying a home. Along with your down payment, your credit score is a deciding factor of getting approved and securing a low interest rate.
Credit can be complicated. And, if you want to buy a home in the near future, it can seem daunting to try and increase your score while saving for a down payment.
However, it is possible to significantly increase your score in the months leading up to applying for a loan.
In today’s post, we’re going to talk about some ways to give your credit score a quick boost so that you can secure the best rate on your mortgage.
Should I focus on increasing my score or save for a down payment?
If you’re planning on buying a home, you might be faced with a difficult decision: to pay off old debt or to save a larger down payment.
As a general rule, it’s better to pay off smaller loans and debt before taking out larger loans. If you have multiple loans that you’re paying off that are around the same balance, focus on whichever one has the highest interest rate.
If you have low-interest loans that you can easily afford to continue paying while you save, then it’s often worth saving more for a down payment.
Remember that if you are able to save up 20% of your mortgage, you’ll be able to avoid paying PMI (private mortgage insurance). This will save you quite a bit over the span of your loan.
Starting with no credit
If you’ve avoided loans and credit cards thus far in your life but want to save for a home, you might run into the issue of not having a credit history.
To confront this issue, it’s often a good idea to open a credit card that has good rewards and use it for your everyday expenses like groceries. Then, set up the card to auto-pay the balance in full each month to avoid paying interest.
This method allows you to save money (you’d have to buy groceries and gas anyway) while building credit.
Correct credit report errors
Each of the main credit bureaus will have a slightly different method for calculating your credit score. Their information can also vary.
Each year, you’re entitled to one free report from each of the main bureaus. Take advantage of these free reports. They’re different from free credit checks that you can get from websites like Credit Karma because they’re much more detailed.
Go through the report line by line and make sure there aren’t any accounts you don’t recognize. It is not uncommon for people to find out that a scammer or even a family member has taken out a line of credit in their name.
Avoid opening several new accounts
Our final tip for boosting your credit score is to avoid opening up multiple accounts in the 6 months leading up to your mortgage application.
Opening multiple accounts is a red flag to lenders. It can show that you might be in a time of financial hardship and can temporarily lower your score.
If you are thinking of buying a home in the near future, there’s one three-digit number that could be oh so important to you. That number is your credit score. Read on to find out how a credit score can affect you and the steps you can take to be sure that your credit is in good standing when you head to apply for a mortgage.
What Is A Credit Score?
Your credit score is checked by lenders of all kinds. Every time you apply for a loan or a credit card, there’s a good chance that your credit score is being pulled to see if you qualify for the loan. Your credit score is calculated based on the information on your credit report. This information includes:
Length of credit history
New credit accounts opened
The areas with the most impact on your score is your payment history and your debt-to-credit ratio. This means that on-time payments are super important. You also don’t want to get anywhere close to maxing out your credit cards or loan amounts to keep your score up.
What’s A Good Score?
If you’re aiming for the perfect credit score, it’s 850. Most consumers won’t reach that state of perfection. That’s, OK because you don’t have to be perfect to buy a house. If your score is 740 and above, know that you’re in great shape to get a mortgage. Even if your score is below 740 but around 700 or above, you’ll be able to get a good interest rate on your mortgage. Most lenders typically look for a score of 620 and above. Keep in mind that the higher your credit score the better your interest rate will be.
What If You Lack Credit History?
Most people should get a credit card around age 20 in order to begin building credit. You can still qualify for a mortgage without a credit history, but it will be considerably harder. Lenders may look at things like your rent payments or car payments. Lenders want to know that you’re a responsible person to lend to.
What If Your Score Needs Help?
It doesn’t mean you’re a hopeless case if you lack good credit. Everything from errors on your credit report to missed payments can be fixed. The most important thing that you can do if you’re buying a home in the near future is to be mindful of your credit. Keep an eye on your credit report and continue to make timely payments. With a bit of focus, you’ll be well on your way to securing a mortgage for the home of your dreams.
Finding the ideal home for your family's needs is no easy task, but if you stay organized and focused, the right property is sure to come along!
One of your most valuable resources in your search for a new home is an experienced real estate agent -- someone you trust and feel comfortable working with.
They'll not only set up appointments for you to visit homes in your desired price range and school district, but they'll also help keep you motivated, informed, and on track. Once you know and have shared your requirements (and "wish list") with them, your agent will be able to guide you on a path to finding the home that will best serve your needs -- both short- and longer term.
In addition to proximity to jobs, good schools, and childcare, you'll probably want to pick a location that's close to supermarkets, recreation areas, and major highways. If you have friends or family in the area, then that would also be a key consideration.
While your immediate needs are a good starting point for creating a checklist of requirements, it's also a good idea to give some thought to what you may need in the future. Plans to expand your family, possibly take care of aging parents, or adopt pets are all factors to consider when looking at prospective homes to buy.
If you have college-age children or recent graduates in the family, you might have to save room for them in your new house. Many grads need a couple more years of financial and moral support from their parents (not to mention home-cooked meals) before they're ready to venture out on their own. Houses with a finished basement, a separate in-law apartment, or even a guest cottage on the property are often well-suited for multigenerational households.
In many cases, people tend to buy a home based on their emotional reaction to it, and then justify the purchase with facts. For example, if the price was right and a particular house reminded you of your childhood home, then that combination of elements could prompt you to make an offer on the house -- assuming those childhood memories were happy!
Sometimes prospective buyers might simply love the look and feel of a neighborhood or the fact that there's a spacious, fenced-in back yard in which they can envision their children or dogs happily (and safely) playing.
According to recent surveys, today's buyers are attracted to homes that have energy efficient features, separate laundry rooms, and low-maintenance floors, counter tops, and backyard decks. Gourmet kitchens, stainless steel appliances, a farmhouse sink, a home office area, and outdoor living spaces are also popular features. Although your tastes may differ, many house hunters also like design elements such as subway tiles, hardwood floors, shaker cabinets, pendant lights, and exposed brick.
When it comes to choosing the home that you and your family will live in for the next few years, your top priorities will probably include a sufficient amount of space, plenty of convenience, and a comfortable environment in which you and your loved ones can feel safe, secure, and happy for the foreseeable future!