That said, the borrower does receive benefits from the loan. First, she benefits from the meticulous appraisal of the home, and second, from the low down payment requirements and attractive interest rates offered by lenders.
Eligibility RequirementsAlthough the Federal Housing Administration won't be loaning the money to you directly (you'll see a conventional lender for that), they'll take a look at your credit profile to determine whether they want to offer insurance on your loan.
Recent FHA changes call for a manual review of applicants with credit scores below 620 and debt-to-income ratios of 42 percent or higher. While these conditions don't automatically disqualify a borrower, it does decrease the number of applicants who qualify.
Statistics show that successful FHA applicants in August of 2013 had an average FICO score of 691, according to FoxBusiness.com. Unsuccessful applicants had an average FICO score of 667.
Remember, the lender may have stricter requirements, so it's always a good idea to take a look at your credit reports, fix any errors, and pay down some of your debt before applying for a mortgage.
The Down PaymentAmerican homebuyers love the low down payment aspect of the FHA loan. Although lending criteria has tightened since the economic downturn, down payment requirements are still low – as low as 3.5 percent of the purchase price of the home.
An applicant with a FICO score lower than 579 may have to pay a 10 percent down payment, while those with higher scores – assuming they have adequate income and meet other loan requirements – typically qualify for the lower down payment.
Mortgage InsuranceMost homeowners know what PMI is – Private Mortgage Insurance. It's that policy they pay for but derive no benefit from. PMI protects the lender in case the borrower defaults.
FHA-insured loans also mandate mortgage insurance, but it's known as the Mortgage Insurance Premium (MIP) instead of PMI. As with PMI, FHA at one time allowed borrowers with a 78 percent loan balance to cancel their mortgage insurance premium. As of June of this year, however, that changed.
New FHA borrowers (since June 3, 2013) with low down payments (a starting loan balance of more than 90 percent of the value of the home) must pay for MIP as long as they have the loan. Borrowers with balances lower than 90 percent can choose to stop paying for MIP after 11 years.
To top it off, in April of this year FHA announced that they would be raising MIP premiums by 10 basis points, making the FHA-insured loan far less attractive than it once was.
Before settling on an FHA-backed loan, ask your mortgage broker to run scenarios comparing it with conventional loans as well as Fannie Mae's "My Community" loan program and Freddie Mac's "Home Possible" mortgage. You may find a better deal than FHA.
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Choosing Colors to Appeal to HomebuyersUsing colors that make the buyer feel "at home" will help you sell your home more quickly. You want them to look at each room and be able to literally see themselves and their belongings fitting inside your walls. Inspire a feeling of peace and relaxation, and part of the sale is already done!
Neutrals and soft colors create a soothing, calm atmosphere. Homebuyers can more easily visualize the paint colors they want when other colors aren't bombarding them at every glance.
Avoid bold, vibrant or dark colors. Even pure white can prove overwhelming. Stay away from trendy colors no matter how good they look to you.
Keep in mind color psychology. Not only do certain colors calm you, but the shade can also affect the room itself. Light colors make a space appear larger. Dark colors, on the other hand, make the room feel smaller. Of course, sometimes a darker color is good if you want a certain effect. A cozy den with a darker color and a bright, cheery kitchen with a lighter color may work best to highlight each room's appeal.
Neutral ShadesEven with neutrals, you still have a variety of colors to choose from. Off-white is a popular, all-purpose color, but it's not the only one. Beige, tan, eggshell and ecru are other colors that work well with almost any style. But your choices range even further: pale shades of blue, green, yellow and gray, for instance, can blend with the house and complement the room. Aim for colors that don't overpower the room or furnishings. Keep the color variations to a minimum to lend a sense of continuity to the house. If every room is a different color, it can prove overwhelming. It's much better to pick two or three colors to use throughout the house.
Painting TipsTake the time to paint properly. Mask off areas that will be left unpainted. Throw down floor and furniture coverings to ensure you don't create damage during the process. Most importantly, prep the wall properly.
You may wish to spread a primer first to block bold colors. If the walls don't require color or stain blocking, sanding the walls slightly or washing with a solution of trisodium phosphate are other options. Both sanding and washing with TSP will remove dirt, oils and other contaminants that prevent the color from adhering well and looking good.
While you paint, take time and care to cut in the corners and avoid drips. Aim for the best paint job of your life – it will be worth it when the buyers sign on the dotted line!
If you can't afford to repaint your entire house, concentrate on a few select areas. The first room the buyer enters is the place to start – remember, first impressions count! Consider painting cupboards, trim and doors along with key rooms. Let your instincts guide you. Look around at other homes for ideas. If your home has a "parade of homes" that local builders showcase, you can glean a lot of tips in a short amount of time.
With a minimum investment, a little time and elbow grease, it shouldn't take long for you to have your home ready for its next owner.
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10) Make snow people (or snow dinosaurs) with your kids, relatives, or friends!
Pro tip: building snow dinos will give you an opportunity to sneak in learning with fun!
9) Drink hot cocoa and snuggle up. Use the excuse of cold weather to make cocoa with a loved one (or five), then indulge in a movie you've been meaning to watch, read a book, or go through a photo album.
8) Take a community class. The winter can be long and dreary in the mitten if you let it - brighten up this time of year and take advantage of the slowed pace. Take a class offered by your city or town. Community classes are usually very affordable and offer a chance to get out during the dark days. Consider enrolling with your significant other, or a child.
7) See the Huckleberry Rail Road. If you live in the area, check out Crossroads Village in Flint. It's home to the railroad, old time shops, a carousel, and fun activities for the family.
Around Christmas the whole village is lit up with lights!
6) Make a home movie. Dig out some toys and play with your kids, friends, or family. Write a script together, then act it out! Set up a home recorder (or smart phone) and record the movie. Years down the road this will be a great memory!
5) Host a dinner party. Get all the people together that you love (and don't always have time to pencil in) and invite them for a dinner party. It can be formal, or not. Let each guest bring a dish to make the night less stressful, and plan a night of board games, movies, or cards for after.
4) Make snow slushies. Get clean snow, put it in a cup, and add a favorite drink!
3) Go to a museum. The Metro Detroit area has a bunch of wonderful museums. The DIA, Cranbrook, the Charles H. Wright Museum of African American History, the Wayne State Planetarium, and many more! If you have a child, nephew, or niece, consider the Michigan Science Center in downtown Detroit on John R. It has a lot of interactive learning for kids!
2) Go on a family vacation nearby. For a fun getaway for any family try the Avalanche Bay at Boyne Mountain, Great Bear Lodge, or Great Wolf Lodge.
1) Plan a library day. Take the time to catch up on work, homework, or reading. Let the kids run around in the play area-if available. Otherwise take the child(ren) to the kids section and let them look through books and videos. See if there is a class or presentation coming up.
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