The U.S. Department of Housing and Urban Development, also known as HUD, helps people by administering a variety of programs that develop and support affordable housing. Specifically, HUD plays a large role in homeownership by making loans available for lower- and moderate-income families through its FHA mortgage insurance program and its HUD Homes program. HUD owns homes in many communities throughout the U.S. and offers them for sale at attractive prices and economical terms. HUD also seeks to protect consumers through education, Fair Housing Laws, and rehabilitation initiatives.
A home for sale "as is" often means repairs will be necessary. Don't write these properties off, the work may not be as bad as you expect, especially if you are the handy type. But approach them carefully, and get a thorough home inspection.
Conventional mortgage loans usually can't be assumed by new buyers, but FHA and VA loans can be. The borrower must qualify for the loan and come up with a large enough down payment to cover the purchase, but for buyers able to clear those hurdles, the lower overall origination costs can make this an attractive option.
Homeowners' insurance policies typically insure the contents of the home for a percentage of the structure's replacement cost. But chances are your furnishings and other "stuff" haven't increased in value as rapidly as your home has appreciated over the past three or four years. As a result, you may be able to shave something off your escalating insurance premium by reviewing the inside coverage amount.
The Truth in Lending Act gives homeowners three days from the day the account was opened to cancel their credit line. However, the homeowner must inform the lender in writing within those three days. According to the FDIC, the lender then must cancel its security interest in the home and return all fees paid.
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.
Do I need to be there for the inspection? It's not required, but it's a good idea. Following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you'd like to purchase and it is a good time to ask general maintenance questions.
An ARM may make sense if you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.
A credit bureau score is a number, based upon your credit history that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.
Now an agency within HUD, the Federal Housing Administration was established in 1934 to advance opportunities for Americans to own homes. By providing private lenders with mortgage insurance, the FHA gives them the security they need to lend to first-time buyers who might not be able to qualify for conventional loans. The FHA has helped more than 26 million Americans buy a home.