FHA loans are mortgages issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.
FHA loans are an attractive, maximum financing option, especially for first-time homeowners.
What Are FHA Loans Exactly?
FHA loans are mortgages issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.
These loans can be attractive for first-time homeowners because of the maximum financing options they offer. An FHA loan can be used to buy or refinance many different types of homes including single-family houses, multi-family homes, condominiums, and certain types of manufactured homes.
Raleigh Mortgage Group works with many FHA lenders to secure borrowers the best rates possible for their FHA loans in Raleigh.
How Do FHA Loans Work in Raleigh, NC?
When you work with Raleigh Mortgage Group to secure FHA loans in Raleigh, NC, we will help you navigate the process. This includes:
Confirm You Meet the Requirements
To apply for FHA loans in Raleigh, NC, you will need a valid social security number, proof of U.S. citizenship, legal permanent residency, or certain eligible work statuses. Lenders also typically ask for bank statements from the past 30 days or more.
Applicants generally need to have a minimum credit score of 580 and be able to provide a 3.5% down payment. There are usually no income limits.
Each FHA-approved lender can determine its own requirements as long as they are in line with the minimums set by the FHA. So, it’s best to check with your lender to see about specific requirements they have established.
Choose an FHA-Approved Lender
When looking for an FHA-approved lender, you’ll want to compare their rates and loan terms. Be sure to ask about down payment assistance, rate locks, and terms. Talking to lenders about the types of FHA loans they offer and the type of customer service they provide is also important. You want to choose a lender that is known for its customer satisfaction.
You can find an FHA-approved lender through local banks and credit unions, as well as national banks. Raleigh Mortgage Group works with many different lenders that provide FHA loans in Raleigh, NC. We will work to find you the best rates available.
Apply for the Loan or Get Pre-Approved
Once you have chosen a lender, it’s time to apply for your FHA loan or get pre-approved. You can get pre-approved by submitting all of the required documents to your lender and an application.
Being pre-approved for an FHA loan means you meet all the lender’s criteria to take out a loan, and you’re likely to be approved. Pre-approval can help you narrow down your home search because you already know what you are qualified for versus trying to get a loan after you have located a home you are interested in.
Inspection and Property Appraisal
Part of the process for FHA loans in Raleigh is to have the home you would like to buy inspected and appraised. The appraisal and inspection process will help confirm the home’s value and safety. It checks for hazards such as mold, asbestos, and other hazards.
The appraisal confirms the home’s value which helps lenders determine the loan-to-value ratio so that they are not lending out more than they should. The appraisal also ensures that the property meets the minimum standards set by the U.S. Department of Housing and Urban Development.
Underwriting and FHA Approval
During the underwriting process of FHA loans in Raleigh, NC, the applicant’s financial information is reviewed to see if they qualify for the loan. They will look at the applicant’s financial status to ensure the loan meets the lender’s guidelines and is not too much of a risk.
Lenders will not approve more than the homebuyer will be able to pay because there is a potential that they can default on their loan. If the underwriting process determines the borrower can afford the loan, they will get approval and move to the final step.
Signing the Final Paperwork and Paying Closing Costs
Before the loan can be disbursed, the borrower needs to sign the final paperwork and pay the closing costs. Closing costs for FHA loans in Raleigh, NC, are typically 2-6% of the loan amount but can vary by lender.
Are FHA Loans Good Compared To Other Loans Within Raleigh?
FHA loans in Raleigh are generally easier to qualify for compared to conventional loans. They have more flexible standards when it comes to income and credit scores and have higher debt ratios.
Mortgage rates for FHA loans in Raleigh are generally lower than those you’ll find with a traditional mortgage loan. But, when applying for an FHA loan, you can expect to have a stricter appraisal and inspection process than you would for a conventional loan.
When you choose Raleigh Mortgage Group for FHA loans in Ralegh, we will explain the entire process to you so that you know what to expect every step of the way. Our team is committed to helping our clients find the right type of loan for their financial situations.
Are There Any Specific Advantages to FHA Loans?
Some of the advantages an FHA loan has to offer includes:
- Generally easier to qualify for than Conventional loans
- Only 3.5% down payment (The 3.5% can be gifted from a family member)
- Allows for higher debt ratios in most cases
- Typically a 580 credit score is needed for the this program
- Maximum loan size varies by county (call for details)
- No income limits
- Co-Signers are acceptable to help with credit, debt ratio and down payment
- Co-signers do not have to occupy the property
- Available on all property types (Condos need FHA approval)
- Can be used to purchase duplex, triplex and quad properties where you can rent the other units (only 3.5% down)
- The loan is assumable when it comes time to sell
- If the home doesn’t appraise then you are able to receive your earnest money back
- Interest rates are typically lower than a conventional loan
- Shortest waiting period after having a prior Bankruptcy, Foreclosure or Short Sale
- If purchasing an FHA Foreclosed home, you can get by with only $100 down
- Loan offers a low documentation streamline refinance option if rates improve
Are FHA Loans Assumable?
Yes, FHA loans are assumable so a new buyer can take over the existing loan from the current homeowners. This can be beneficial for buyers who want to secure a mortgage with a lower interest rate.
For this to happen, the buyer must meet certain financial qualifications and the lender must approve the assumption of the loan.
How Many FHA Loans Can You Have At One Time?
The Federal Housing Administration generally limits borrowers to one FHA loan at a time. But, there are exceptions. If your family outgrows your current home or you are relocating, you may be able to qualify for a second FHA loan.
To qualify, you must prove you can afford two mortgage payments and have enough for the down payment for the second property.
Contact Raleigh Mortgage Group to Learn More About FHA Loans in Raleigh, NC
Our team at Raleigh Mortgage Group is here to assist you with all your FHA loans in Raleigh, NC. We work diligently with various lenders to help find the best rates for you.
We will explain the entire process every step of the way so that you can make educated decisions about your finances. For more information, Call Us at 919-866-0212 or use our Contact Us page to learn more!