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How to Qualify for an FHA Mortgage

(TNS)—If you’re concerned about getting approved for a conventional mortgage, keep your dreams of homeownership alive by considering a mortgage insured by the Federal Housing Administration. For borrowers who meet FHA requirements, this mortgage alternative is a terrific way to buy a home with a low down payment and less-than-perfect credit.

What Are the Requirements for an FHA Loan?
In order to obtain approval for an FHA loan, the borrower must satisfy the following requirements:

  • Steady Employment History – Borrowers typically must have been regularly employed within the past two years. Self-employed borrowers have to prove that their business has drawn stable income for at least two years; verification, such as tax returns or company documents, is required.
  • Ability to Pay – This is determined by two formulas: the front-end ratio and the back-end ratio. The front-end ratio refers to the entire amount that the borrower spends on housing costs, and it must be less than 31 percent of the borrower’s gross income, with some exceptions that push limit up to 40 percent. This includes expenses such as the principal, interest, property taxes, homeowners association fees, mortgage insurance, and homeowner’s insurance. A borrower’s back-end ratio, also known as the debt-to-income ratio, encompasses all of the borrower’s debts, including the mortgage payment, credit debt, and personal loans, and it should be less than 43 percent.
  • Financial Soundness – The borrower must have a credit score of at least 580 and be able to afford a minimum down payment of 3.5 percent. Some institutions may accommodate lower credit scores if the borrower is able to pay a larger down payment. She must be a minimum of two years out of bankruptcy and not have a foreclosure in the past three years. All her federal student loans and income taxes must be current.
  • Residency – The borrower must be a lawful U.S. resident with a valid Social Security number, and she must be the occupant of the home.

What Costs Are Associated With an FHA Mortgage?
Like conventional mortgages, there are costs associated with FHA loans that the borrower has to pay when the loan closes, including lender fees, prepaid interest, inspection expenses, and attorney fees. The FHA mortgage program permits lenders and property sellers to pay some or all of the buyer’s closing costs.

To insure the mortgage against default, the borrower must also pay an annual mortgage insurance premium. The MIP varies based on the terms of the loan, including the principal, loan-to-value ratio, and term. On average, expect to pay 0.85 percent of the loan amount each year.

Borrowers may be required to pay a one-time additional mortgage insurance fee at the time of closing, called the Up-front Mortgage Insurance Premium. As of 2017, the UFMIP is equal to 1.75 percent of the mortgage.

Want to learn how long it’ll take you to pay off your mortgage? Run the numbers through Bankrate’s mortgage calculators.

What Are the Disadvantages of an FHA Mortgage?
Since an FHA loan permits a lower down payment, you can expect to pay more interest over the life of the loan than you would with a conventional mortgage that necessitates a larger down payment.

Visit Bankrate online at www.bankrate.com.

©2017 Bankrate.com
Distributed by Tribune Content Agency, LLC

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A new downsizing option will soon be available in Charlotte

If you are thinking of down-sizing, this may be the perfect opportunity for you.

Charlotte is soon to be home to its first community of tiny houses. The tiny house, or small house, movement describes an “architectural and social movement that advocates living simply in small homes.” These homes usually total no more than approximately 500 square feet, and they are becoming increasingly popular as real estate costs continue to rise.

With home prices averaging around $300,000 and the average one-bedroom apartment renting for approximately $1100, many potential homeowners are considering going tiny to save costs and to scale back their lifestyle.

This new tiny home community in Charlotte aims to be affordable without being cheap. Situated on a 20-acre site, there will be 59 lots ranging in size from 493 square feet to 1,000 square feet. These tiny homes will start at $89,000, thus keeping mortgage costs below $500 per month. They can be built in approximately four to six weeks and they are fully customizable. While some tiny homes are meant to be moved or towed, these homes are permanently situated on their lots, allowing for mortgaging options rather than just a full cash payment.

The tiny house movement is the next big thing, and for more details on this new Charlotte community and what it means for the real estate market here, be sure to check out the article at wcnc.com.

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Neighborhood Spotlight: Waxhaw’s Barrington

Let’s check in with the fantastic new neighborhood of Barrington located in Waxhaw, North Carolina near South Charlotte in Union County. This beautiful new construction community posts a junior Olympic pool including a splash area, kiddie pool and open-air cabana. The neighborhood also has plenty of walking trails as well as a playground, making it a great place for young families.

There are currently six homes on the market in Barrington representing 3.1 months of inventory, which is lower than Waxhaw’s inventory as a whole, which is currently at 5.5 months. While Waxhaw has a fairly balanced market, Barrington’s inventory seems to favor the sellers.

However, the average price per square foot has gone down over the past year from approximately $120 per square foot to approximately $115 per square foot, which bodes well for buyers. Furthermore, the average sales price has remained fairly steady over the last 12 months.

Homes currently on the market range in size from just over 2800 square feet to just under 4100square feet and range in price from $349,900 to $469,900. Many of these homes also feature premium finishes, including hardwood floors, stainless steel appliances, granite or quartz countertops, and more.

This is a great family neighborhood in a sought-after school district featuring floor plans that cater to families and beyond.

If you want to learn more about Barrington, give us a call at (704) 525-4045. You can also view current listings on our website here.
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The Dilworth Home Tour is right around the corner

Get ready for some great architecture!

Each year, the Dilworth home tour offers visitors a chance to preview homes throughout one of Charlotte’s most popular historical and charming neighborhoods. The self-guided tour includes seven stunning homes all differing in size and architectural style.

This annual home tour will be taking place on Friday, September 15 from 6 to 9 PM, and on Saturday, September 16 from 10 AM to 4 PM. Charlotte’s oldest home tour is organized each year by the Dilworth Community Association (DCA) with proceeds of ticket sales benefiting the Dilworth community. Tickets for the tour are $25 and can be purchased at the Dilworth community association website.

While it is a self-guided tour, attendees should allow approximately two hours in order to be able to view all of the art, architecture and sheer square footage included on the tour. Homes on the tour include 410 East Park Ave., 830 East Park Ave., 317 East Kingston Ave., 1300 Myrtle Ave., 1239 Belgrave Pl., 1214 Belgrave Place, and 804 East Worthington Ave.

The Dilworth home tour is a fantastic opportunity to get a much closer look at the beauty and uniqueness of this historic neighborhood. For more details and information on the Dilworth home tour and all it has to offer, be sure to check out the full article at Charlottefive.com.

And, for more information on Dilworth or the homes on the market there, give us a call at (704) 525-4045. You can also view current listings on our website here.