Buying a house with an FHA loan
Today is a great day to buy a home with rates as low as 3.75% for a 30 year fixed mortgage. It can seem complicated but let’s simplify it with an example.
We are going to purchase this lovely home for $350,000, because I want the lowest down payment for a home I’m going to do an FHA loan; conventional requires 5% minimum down payment. I am going to put down $12,250 dollars.
Because I am choosing to do an FHA loan I need to have everything taken care of by the end of the month or else I will have to pay taxes for the following month too.
After talking to a loan officer (i.e. me) I am going to use today’s rate of 3.75% for a 30 year fixed loan to figure out how much I am going to pay for monthly, including taxes and insurance. My loan officer told me it’s going to cost me $2289 roughly a month. Now I know what I need to have in my bank account for reserves. Since its August and the next set of taxes are due in November I will need 4 months (maybe less/maybe more). So I check my bank account to see if I have $9156, and I do. I also made sure my credit score is at least a 640 to qualify.
I get all my paperwork together that I will need to send in for my loan officer to input into my loan; w2 for 2 years all the pages, my last 2 pay stubs, and my bank statement for 2 months. My soon to be new home is getting an appraisal; I picked out my title insurance company, and Escrow Company. I get my approval, and I find out that my appraisal is done (it’s the same as my asking price).
I get a home inspection because I want to make sure there are no damages that may not be visible. I found out the roof needs to be replaced, my realtor informs me that it will be taken care before the purchase. I shop around and get the best deal for home insurance.
I do one more walk through and everything is ready for my arrival. Now all I do is go in to do the final closing and settlement paperwork.
Now the hard part, packing and moving in.