The Federal Housing Authority revises the guidelines for acceptable DTI (Debt-to-Income Ratio) on FHA-backed loans regularly. They have increased slightly in the last few years. In 2013, for example, DTI allowed up to 29% of earnings as real-estate expenses, and 41% in total long-term debts including real estate. As of 2020, FHA guidelines allow up to 31% in real estate and 43% in total monthly debt payments. Approval to exceed these ratios is sometimes allowed, if: You can make a large down payment You have large cash reserves Other assets that make a substantial personal net worth Your credit history is especially good The mortgage terms are better than current averages Another organization is providing some of the mortgage funds Keep in mind that these are maximums, aimed at helping consumers take on sustainable levels of debt. Consider your long-term situation carefully and dont think of these ratios as automatic targets.

Loans from FHA-approved lenders (Federal Housing Authority) provide more flexibility than conventional loans. Here are some of the things generally allowed in re-establishing credit via FHA loans: If you went through foreclosure or deed-in-lieu, if 3 years have passed, you may be eligible If you had outstanding tax liens, if youve arranged a repayment plan with Federal (IRS) or state tax authorities, you may be eligible If you have judgements that have been paid, you may be eligible If you went through bankruptcy at least 2 years ago, you may be eligible. For borrowers with unusual credit records — for example, those who prefer paying in cash and carrying no debt — FHA may be an option. Likewise, new or first-time buyers with little established credit should investigate FHA programs for assistance. Talk to an FHA-approved lender to learn more.

Loans from FHA-approved lenders (Federal Housing Authority) follow most of the same steps as conventional loans. As you might expect, because a Federal agency is involved in the loan, there may be just a bit more paperwork. The FHA has worked hard to speed up the origination process. Their innovations include options for applying without face-to-face meetings, via telephone and video conference. Search for FHA-approved lenders in your area, and get in touch with them to find out about current programs and options for your situation.

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.

Closing and loan consummation costs are not 100% identical in different states, but you can expect most of the following: Fees for Loan Origination — processing and administration of the loan Fees For Recording — official records of ownership. Fees for Survey(s) The first Mortgage Insurance premium, if your loan requires it. To-date Property Taxes Title Insurance fees — yours and the lenders. (See Title Insurance Made Simple on this site.) Points (prepaid interest) Escrow fees and/or attorney fees Document preparation fees First payment to the escrow account for future taxes & insurance If you have not already paid homeowners insurance, that will come up. Likewise, if flood insurance or fire insurance are required, youll need a receipt or payment arrangements. Read things carefully before signing or paying, and keep copies.

"Closing" sounds kind of mysterious - as if big complicated secret events are going to take place. Formally speaking, closing is the final steps of becoming the owner of a property. Those steps frequently overlap with "consummation", which is the process of committing to the financial obligations of buying with a mortgage loan. No mystery or secret, really. Heres the main things that will happen: For most types of home purchases, you will get a Closing Disclosure detailing the loan terms, at least 3 business days prior to consummation (which is frequently the same date as closing.) At the live closing meeting, you should end up with: A copy of your Mortgage Note — the formal document where you commit to pay the loan Your Deed of Trust or Mortgage documents The binding Sales Contract In some states, you might also get the keys to the house; in other states, that physical handover might happen separately. By this time, your real estate and finance professionals should be well acquainted with you and the transaction. Theyve been through this before. Relax, ask questions as you go, and be prepared to sign a few papers! Take the time to read them thoroughly before committing.

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!

Real estate transactions are complicated, and real estate agents are usually involved to ensure they are successful and legal. In many cases, there are 2 agents — one representing the buyers interests, one the sellers. In most cases, real estate agents are compensated with a percentage of the transaction, which links their payment to a successful job. In most states, 6% has long been the common commission percentage. This is split — usually in half — when two agents are involved. Real estate commission rates are not set by the government, or by industry bodies. In most states, commissions are legally negotiable. Keep in mind that point above - commission is linked to success. Think about the expertise and work you need them to do to understand how they earn the commission.

Books and songs have titles; so do homes! The word "title" has a specific meaning in relation to property; it essentially means valid, provable ownership. If you "hold title" on a home, you own it. Its not as automatic and clear-cut as you might expect, so its worth watching this short video to get the basic idea. If youve ever played a board game where you own properties, houses and hotels...thats a great way to get keep "title" in mind. Imagine what would happen if the game table fell over, and all the pieces and cards were scrambled. Being absolutely sure who owns what, and where the pieces should go, suddenly gets complicated. Fortunately, in the world of real property, government entities act like a neutral party keeping records. In the long run, your home may become one of your biggest assets. You can insure your ownership of the asset with title insurance. Meet Stickman; hell explain title insurance with that board game.

You are likely to hear the term "closing" frequently in buying or selling a home. That short word captures most of the final steps involved in finishing the transaction and financing, and becoming the owner. Many of these steps have costs, so youll hear the term "closing costs" as well. Closing may be a small word, but closing costs can become sizable. Buyers are well advised to understand the cash that will be needed for closing costs as early as possible. Required forms and steps in the mortgage process, such as the Loan Estimate form covered in other videos here, will help you know the range of costs to expect. This short video will help you relate various closing costs and processes to understand them more clearly.