Purchase a Home
There are lots of good reasons to choose an FHA Home loans when buying a home, especially if one or more of the following apply to you:
- You're a first-time homebuyer.
- You don't have a lot of money to put down on a house.
- You want to keep your monthly payments as low as possible.
- You're worried about qualifying for a mortgage.
- You don't have perfect credit.
If any of these things describe you, then an FHA loan may be right for you. Why? FHA loans offer many benefits and a level of security that you won't find in other mortgages including:
- Low Cost: FHA home loans have competitively low interest rates because the federal government insures the mortgages for lenders.
- Smaller Down payment: FHA loans have a low down payment and the money can come from a family member, employer or charitable organization as a gift.
- Easier Qualification: Because FHA insures your mortgage, lenders maybe more willing to give you mortgage terms that make it easier for you to qualify.
- Less Than Perfect Credit: You don't have to have perfect credit to get an FHA Home loans. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA mortgage than a conventional mortgage.
- Fixed Rate Mortgages: Most FHA loans are fixed-rate mortgages. The advantage of a fixed-rate mortgage is that your interest rate stays the same during the mortgage.
- Help You Keep Your Home: The FHA has been around since 1934and will continue to be here to protect you when the others walk away. Should you encounter hard-times after buying your home, FHA has many options to help keep you in your home and avoid foreclosure. An FHA home loan will help you buy your house and keep it too.
Step 1.Figure Out How Much You Can Afford.
FHA loan guidelines have a specific calculation that compares your current gross income to your existing debts in order to provide a maximum loan amount that you can qualify for. What you can afford also depends on your down payment and interest rate.
Our experience has shown that it is not wise just to find out what is the maximum amount for which you qualify. It is essential that you determine, what is the maximum monthly mortgage payment that you are comfortable with, based on your personal monthly budget. You can go to our FHA mortgage calculator and see what you qualify for and what your payments would be. There are several FHA loan calculators available to choose from. It is also a smart idea to check the FHA loan limits in the country that you want to purchase your home in. Please click here FHA loan limits to find out the loan limits in your area.
Step 2.Get Prequalified
Contact mdallal@fhaloansnow.net for an FHA prequalification or by clicking get an FHA loan quote and apply for a free non binding quote and pre approval or by calling one of our mortgage specialists that are standing by at 800-871-9326.
Our FHA interest rates and closing costs are consistently lower than our competitors. Compare our FHA Home loans interest rate to the national overnight average at bankrate.com.
Step 3.Shop for a Home
Once you have your FHA Home loans prequalification, you should contact a real estate agent that is experienced in home purchases using FHA financing in order to discuss available homes and options in your target area. If you do not have a real estate agent we can refer one to you. We work with the top realtors through out the country.
Using a real estate agent with a solid understanding of FHA guidelines regarding approved home types and seller concessions in critical to help you save time and money.
Step 4.Make an Offer
When you have found a house that you want to buy, you will submit an offer with the help of your real estate agent. Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale. Your offer becomes a legally binding contract if the seller accepts it. Because of this, you need to make sure the offer includes all of the contingencies, concessions, and other details you need it to cover.
Step 5.Get a Home Inspection
Make sure that the offer that you make is contingent on a home inspection. A home inspection gives you more detailed information about the overall condition of the home prior to purchase. In a home inspection, a qualified inspector takes an in-depth, unbiased look at your potential new home to:
- Evaluate the physical condition: structure, construction, and mechanical systems;
- Identify items that need to be repaired or replaced; and
- Estimate the remaining useful life of the major systems, equipment, structure, and finishes.
The home inspector does not estimate the value of the home. An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are for buyers.
An appraisal is required to:
- Estimate the market value of a house;
- Make sure that the house meets FHA guidelines minimum property standards/requirements; and
- Make sure that the house is marketable.
FHA does not guarantee the value of the condition of your potential home. If you find problems with your new home after closing, FHA cannot give or lend you money for repairs, and FHA cannot buy the home back from you. That is why it is so important for you, the buyer, to get an independent home inspection.
It is your responsibility to be an informed buyer. Make sure that you are satisfied in every respect with the home you are going to buy. You have the right to carefully examine your potential new home with a qualified home inspector.
Step 6.Shop for Homeowners Insurance
FHA loans require that you have homeowners insurance. This is an insurance policy that combines liability coverage and Insurance to protect you against physical damage to a property from fire, wind, vandalism or other hazards.
Step 7.Sign Papers
When your final FHA Home loans documents ready for you, your closing appointment will be set to finalize your home purchase transaction. Make sure you read everything before you sign.
What are the differences between the 2008 tax credit law and the Obama 2009 first time home buyer tax credit law?
Last year a first time home buyer tax credit of up to $7500.00 was created as part of the Housing and Economic Recovery Act of 2008. It went into effect on April 8th, 2008 and was set to expire July 1st, 2009. While it had good intentions, it was basically an interest-free loan from the IRS that was required to be repaid over 15 years.
On February 17th, 2009, President Obama signed the American Recovery and Reinvestment Act that included, as one of its key provisions, a modification of the first time home buyer tax credit. The majority of the workings of the first time home buyer tax credit remained the same. But, there were some impressive revisions such as the increase of the maximum credit amount to $8000.00 and the removal of the 15 year repayment requirement.
The following is a summary of the new 2009 Obama first time home buyer tax credit.
Amount of the Credit
2008 – Lesser of 10% of the cost of the home or $7500.
2009 – Maximum credit amount increased to $8000.
EligibleProperty
2008 – Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence that was not purchased from a source related to them (i.e. a spouse, parent, child, etc.).
2009 – No change, any principal residence is eligible.
Refundable
2008 – Yes, the tax credit reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded topurchaser.
2009 – No change, purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit
2008 – The full amount of the credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). It phases out above those caps ($95,000 and $170,000).
2009 – No change, the same income limits continue to apply.
First Time Home Buyer Only
2008 – Yes. A first time homebuyer is defined by the IRS as those not having had any ownership, including that with a spouse if married, during the three-year period ending on the date of purchase.
2009 – No change.
Revenue Bond Financing
2008 – No credit allowed if home financed with state/local bond funding.
2009 – Purchasers who utilize revenue bond financing can obtain the credit.
Repayment
2008 – Yes, a portion (6.67% of credit or $500) is to be repaid each year for 15 years, starting with 2010 tax filing.
2009 – No repayment for purchases on or after January 1, 2009 and before December 1, 2009.
Recapture
2008 – If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.
2009 – If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in2009.
Termination
2008 – July 1st, 2009
2009 – December 1st, 2009
Effective Date
2008 – Purchases on or after April 9, 2008 and before January 1st, 2009.
2009 – All revisions are effective as of January 1st, 2009
So if you buy a house under the criteria listed above, how do you claim your first time home buyer tax credit?
File form IRS 5405 "First-Time Home buyer Credit" along with filing the 2008 tax return (if not yet filed), an amended 2008 tax return (if already filed), or the 2009 tax return.
