? – understanding the FHA loan process
When you take out a loan secured by the Federal Housing Administration, or any other type of mortgage, you may have to pay points to get the rate you want. Lenders must disclose the fees for points after submitting an application and re-disclose this information at closing. If you have already closed on your FHA loan and know where to apply for FHA loan, you can check the closing statement to see what points, if any, you have paid.
Mortgage points come in two varieties – discount points and starting points. Discount points reduce the rate of interest on your loan through the intermediary of making an interest payment prepaid. You do not have to pay discount points, but many people choose to pay for them in order to get a lower interest rate. Starting points are the lender processing fees that cover the costs associated with underwriting your loan. In the past, origination fees were capped at one percent of the loan amount, but starting in 2010, the FHA does not caps starting points – with the exception of reverse mortgages and FHA rehab loans.
Estimate of good faith
Lenders often quote mortgage rates for you before where to apply for FHA loan, but a lender cannot assure you of a rate until you have actually submitted the application and need to know where to apply for FHA loan. Within three days of applying for the loan, your lender must provide you with a good faith estimate. This document explains how much the loan should cost, depending on your lender checking all the information on your application. The GFE includes a variety of information, such as your interest rate and the details of all the points you have to pay.
When you close your loan the lender must provide you with a closing statement. The US Department of Housing and Urban Development requires lenders to include certain information on the closing statement – such as details of any fees you have paid. Closing, or HUD, statement separately lists the amount of the discount or origination fees you paid. Some lenders bundle expenses together non-negotiable – such as property tax – with lender charges charged as part of your origination fees on the GFE. However, on the closing statement, the lender must detail these fees so that you can clearly see what you actually paid the lender for what you pay to your insurance company or a local tax authority.
Points increase the initial cost of taking a mortgage and many people are therefore reluctant to pay points since FHA loans are primarily aimed at people who have little money to make large down payments. However, you can deduct the amount you spent on FHA mortgage points from your taxable income, but only if you paid the points for a loan secured by your principal residence. In addition, you can only deduct points that are for lender fees and interest charges and not points charged in place of standard fees such as taxes and insurance.
Necessities for a condo to be accepted FHa
The Federal Housing Administration provides mortgage loans and refinancing loans. You can use a FHA-backed loan to finance a condominium, but only by living in an FHA-approved condo. condo property values tend to fluctuate more than other types of real estate, and as a result, lenders and insurers, such as the FHA, do not finance or insure mortgages on condos that meet certain guidelines .
To obtain FHA approval, a condominium complex must contain two or more units and a complex must have a home occupancy rate of at least 50 percent. Units that are still built must have been sold to buyers and at least 50 per cent of condo buyers must intend to use condos as their primary residence. A condo project may not have more than 25 percent of its area reserved for commercial purposes. Each condo project must re-apply for FHA approval every two years.