The video puts this in more visual terms, but 203(b) is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines limited lenders fees, and a maximum loan amount. 203(k) loans enable homebuyers to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the sellers existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows: The home must be at least one year old. The cost of rehabilitation must be at least $5,000, but the total property value - including the cost of repairs must fall within the FHA maximum mortgage limit. The 203(k) loan must follow many of the 203(b) eligibility requirements. Lenders will know specifics about improvement, energy efficiency, and structural guidelines.

The Federal Housing Authority — FHA — is a Federal agency tasked to help more Americans take advantage of home ownership. While the FHA is not a direct lender, it operates a wide range of programs to help people. FHA-approved lenders frequently allow for smaller down payments and easier terms than conventional non-FHA loans. Its not uncommon for FHA payments on a home you own to be lower than rent! If you think home ownership is out of reach, get in touch with FHA-approved lenders and see what current programs can do to help you out.

If you hear the term "closing day", understand that it refers to a bunch of things that will usually (but not always) happen right at the end of buying a home. Laws and practices vary in different states, but here are some of the common things that might take place on your closing day: Youll receive a formal Closing Disclosure at least 3 business days in advance. Youll provide proof that youve arranged homeowners insurance, such as an insurance binder document or a receipt for the premium. Someone - usually the closing agent - will provide a list and documentation of whats still owed: Down payment remaining Tax prepayment Fees They will also detail any costs owed by the sellers, like: Taxes to be paid Prepaid rent Sellers may also have to provide documentation, like proof of inspection or warranties. Once you are clear on these, you will probably sign the mortgage. The mortgage gives the lender rights to the house; if you dont make the payments, they have rights to recover the loan and interest by selling. You will probably also sign a mortgagenote, which is your promise to repay the loan. You will end up with title to the house, usually in the form of a signed deed. Youll pay all of the closing costs, and receive a settlement statement covering what was paid. The mortgage and the deed will be "recorded" -- literally, put in government records such as a state Registry of Deeds. And now youll be a homeowner. Dont forget the keys!

"Well pull your credit." is the bland phrase you might hear from a lender. What does that mean? Three companies — Experian, TransUnion and Equifax — maintain records of peoples debts and payments. They issue a credit score for you, based on this data. From a lenders perspective, the credit score provides a consistent measure to assess the possibility of a borrower defaulting on a loan. Your credit score can directly affect qualifying for a loan, rate and other terms. The better your score, the better your borrowing situation. A good credit score saves you money, which can help you maintain a good credit score. Its worth checking your credit score regularly, but particularly before a big transaction like a mortgage. If there are issues, start addressing them early. This video may help you understand the score; look for other videos here on credit scores and credit history for more.

Intimidated by mortgage loan terms and the list of fees? This short explainer video will help you get a handle on all of it. While a mortgage involves borrowing money for a home, there can be quite a few items and fees in the stack of papers. "Loan origination" -- the process of documenting and evaluating your loan application -- is not free. The "loan application fee" is one of the key components to understand. This fee generally covers: The lenders costs to verify, evaluate and underwrite the loan. This fee also pays for appraisal of the property — a professional valuation for the lender (not for the buyer.) Fees to "pull" your credit history. Other surcharges; ask the lender for a detailed list. Loan application fees are generally non-refundable.

Heres a video listing the DO and DONT steps to follow in the process of getting a mortgage loan. To ensure you wont fall victim to loan fraud, make sure you follow all of these steps in the process of applying for a loan. DO: Be honest about residency; if youre not going to live in the house, say so. Be clear and honest about any questions related to your credit history. Report your finances — debt, income and everything else — accurately. Do NOT: List fake co-borrowers Change tax return figures Overstate assets or valuations Fudge employment records Provide incorrect files to answer questions Exaggerate income or investments Buy property for someone else. Of course, do not sign ANY blank documents, and be sure you have read and understood anything that you do sign. And DO keep your own records of everything.

"Prime has dropped (or raised) 0.X%" Youll see some version of that headline all the time, particularly if youre looking for a mortgage. You may even be considering a loan that is based on "Prime". But what is Prime?? In a nutshell, the prime lending rate is the interest banks charge each other for overnight loans. This rate is based in turn on the interest rate the Federal Reserve charges for money it lends to banks. Heres an example from the video. Bank A borrows money from the Federal Reserve, at 1% interest. Bank B borrows from Bank A at 4% interest. (Historically Prime has been about 3% above the Federal rate.) Both Bank A and Bank B recalculate loans "based on Prime" — like Adjustable Rate Mortgages — on that 4% figure. The short-hand term "above Prime" in the world of mortgages is the margin (or spread) added to the Prime rate. An ARM with 2% margin would be 6% (4% + 2%) in the example above. Watch our short video to see this explained visually.

Buying your first home? Many lenders provide affordable mortgage options specifically designed to help first-time buyers. Home purchase is a big and often difficult step; these programs may help. If any of these apply: You have long-term debts You have, or have had, income irregularities Your credit history notes past challenges You have not accumulated enough for closing and down payments First-time buyer programs may be able to help. Talk to lenders early.