Many homebuyers opt to purchase a new house with an FHA mortgage because of its easier to qualify for and lighter on the pocket. FHA home loans offer a back-up option to those whose credit histories and financial situations disqualify them from conventional mortgages. It’s now possible to own a home with a 3.5% down payment rate!
One of the first things that interested applicants need to know about FHA loans, though, is that it is NOT directly financed by the Federal Housing Administration. The FHA is not the one lending the money; they only insure the loans originated by mortgage lenders to lessen the risk. While the government has some standards for FHA lending, the lenders still have the final say. They can modify the qualification requirements and set the interest rates for the loan.
Choosing the Right FHA Lender
- Only work with FHA-approved lenders
One of the first and most important things that you need to do when applying for an FHA mortgage loan is finding an FHA-approved lender. While there may be a lot of lenders in your area, only recognized lenders can process and close an FHA mortgage. You can check the list of HUD-authorized lenders online.
- Get to know the different FHA loan products
There are different types of FHA loans and they can come in fixed-rate and adjustable-rate. Some lenders only offer one or two types of FHA products, while others carry the whole range – including mobile home loans and FHA Home Equity Conversion Mortgages or HECM.
If you want to snag a good deal, you need to get to know these different options and understand what they entail. Once you know what you’re looking for, you can start searching for FHA lenders offering that specific loan product.
- Shop around and compare offers
The key to landing a great deal is shopping around. As mentioned, the FHA does not regulate the interest rate and other costs that come with the mortgage. A wise borrower will talk to different lenders, evaluate their quotes, and compare offers.
You’ll also find out that you’re good enough for some lenders but not for others. If you fail to qualify the first time, look for other lenders and try again. Applicants can prequalify for FHA loans online, which makes the entire process even more convenient.
- Choose trusted and experienced FHA lenders
With so many mortgage lenders offering FHA loans nowadays, it’s become necessary for borrowers to filter their options. All FHA-approved lenders can originate your loan, but as you go deeper into the process you’ll find out that it pays to work with a lender that has adequate experience and up-to-date knowledge of FHA loan products.
There are plenty of mortgage companies that offer competitive rates out there; what you need the most is a lender that pays attention to your needs and queries, and makes you feel comfortable.
Keep in mind that the FHA lender you choose will define your loan-processing experience.
by nico2me
