After several years of diligently saving money, I’m nearly ready to purchase my first home. Because I’ve been thinking about buying a home for so long, I know exactly what I want my house to look like. I desire a place that has three bedrooms and three bathrooms. I also need a quiet space to set up my home office in. I want a massive, walk-in closet in my master bedroom. My master bathroom needs to have double vanities, a tiled, walk-in shower, and a Jacuzzi tub. On this blog, I hope you will discover how to set priorities during your new home search. Enjoy!
The Federal Housing Administration was, at one time, referred to as "Farmer's Home Administration" because it helped farmers and rural property owners build homes on their land. Many people who could not afford a house could use this program to build one on rurally located property. After its restructuring and renaming, it became a program that was synonymous with low rate home-buying loans and low rate construction loans. Here is how the program works.
Low Income Families Apply for a Loan
Depending on the type of loan you want to borrow, you fill out all of the necessary paperwork and return it to the nearest FHA office. They review your application (in this case, a construction loan for a new house). Once they approve your application, you sit down with FHA's pre-approved home contractors to determine the size and location of your home. Only home contractors selected by FHA are allowed, since only these contractors are certified to receive the government money to build your home.
Several More Meetings on Home Size and Design
Before construction begins, you will meet with the FHA home contractor to go over the building plans for your new home. You can change certain details, such as the size of the closets or the location of the bathroom. Most of these homes follow a standard ranch or Cape Cod sort of floor plan. They are not fancy, but they are your own when they are complete. After each set of changes is made, you meet with the contractor again to approve the changes. After the final approval, the contractor begins to excavate the site for a basement and build on the top of that.
Your Home Construction and Mortgage Combo Loan Pays the Bills
A home construction loan is often a combo loan, including in it the mortgage for the property and house. As your house continues to be built, FHA pays the contractor and his/her crew out of the money tucked into an account and managed by an FHA-approved realtor. When the work is complete, the contractor and his/her crew are paid in full and you are ready to move in. You will make monthly mortgage payments just like everyone else, except your interest rate is significantly less so that you do not get stuck and go into foreclosure. In some instances, you may even be able to start paying on your loan before your house is complete.