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How to be a Smart Shopper When Looking for an FHA Loan
Author David Schneider | Nov 16,2007
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Shopping for an FHA loan really isn’t any different than shopping for any other type of home mortgage loan. While FHA loans have their set of guidelines and requirements, you really have to take the same steps when shopping for an FHA loan that you would for any type of mortgage. First, you need to do a little self-evaluation to evaluate your personal financial situation. Once you have evaluated your personal financial picture, then you can move on to shop and compare FHA mortgage lenders.
3 Steps to Finding an FHA Mortgage Lender: Step No. 1 -- Figure Out What You Can Afford
FHA mortgage lenders generally require that your monthly housing obligations (mortgage payment, taxes and insurance on the property) do not exceed 29 percent of your gross monthly income. Figure out what monthly mortgage payment you can afford. You also need to consider your other financial obligations. If you have too much debt, then you may not be able to afford to add on the expense of owning a home.
3 Steps to Finding an FHA Mortgage Lender: Step No. 2 -- Pull Your Credit
FHA mortgage lenders require that you have a good credit score and credit history. So if you do not already know your credit history or credit score, you may want to pull your credit report from all three credit agencies to evaluate it first before going to a lender. Reviewing your credit ahead of time will help you to avoid problems later. Check your credit for any errors and take the steps that are necessary to correct these errors before approaching an FHA lender.
Also, knowing your credit score will help you target lenders that provide FHA mortgage programs for individuals with your financial situation. While lenders that offer FHA programs must abide by FHA guidelines, they also have their own lending guidelines and interest rates, which are going to vary from lender to lender. Knowledge is power, so if you know that your credit score is not high enough for one FHA lender, but is high enough for another FHA lender, this will narrow down the lenders that you will be shopping with for your mortgage.
3 Steps to Finding an FHA Mortgage Lender: Step No. 3 -- Do Your Homework
Like any major project or decision, you need to take the time to do a lot of research. Go online and read current magazine and newspaper articles so that you will know what the current mortgage situation is, who the FHA lenders are and what their individual lending guidelines are. Make a list of possible FHA lenders from this research and asking friends, family and co-workers which lenders they have used recently for their own mortgage needs.
When you contact FHA lenders, be sure to get all of the costs, pricing, interest rate and payment information. Also, be sure to shop lenders that you are comparing on the same day. Since interest rates fluctuate, it is the only fair way to compare lenders.
Even though there may be multiple lenders that offer FHA backed mortgages, this does not mean that they offer the same terms and conditions for the mortgage. Different interest rates, length of mortgage and other payment conditions may and will vary from lender to lender. So when you are shopping for an FHA mortgage, keep in mind that not all FHA lenders offer a one-size-fits-all mortgage. Shop around with at least three different FHA lenders and compare every item of the mortgage to see which lender offers the FHA mortgage that is the best for you.
These are just a few tips and guidelines on how you should go about shopping for an FHA mortgage. Educate yourself and do your homework before you commit to working with any FHA lender. This will help you to be a smart consumer because you will be armed with the facts and figures that you need to make an educated decision. Shopping for an FHA loan really isn’t any different than shopping for any other type of home mortgage loan. While FHA loans have their set of guidelines and requirements, you really have to take the same steps when shopping for an FHA loan that you would for any type of mortgage. First, you need to do a little self-evaluation to evaluate your personal financial situation. Once you have evaluated your personal financial picture, then you can move on to shop and compare FHA mortgage lenders.
3 Steps to Finding an FHA Mortgage Lender: Step No. 1 -- Figure Out What You Can Afford
FHA mortgage lenders generally require that your monthly housing obligations (mortgage payment, taxes and insurance on the property) do not exceed 29 percent of your gross monthly income. Figure out what monthly mortgage payment you can afford. You also need to consider your other financial obligations. If you have too much debt, then you may not be able to afford to add on the expense of owning a home.
3 Steps to Finding an FHA Mortgage Lender: Step No. 2 -- Pull Your Credit
FHA mortgage lenders require that you have a good credit score and credit history. So if you do not already know your credit history or credit score, you may want to pull your credit report from all three credit agencies to evaluate it first before going to a lender. Reviewing your credit ahead of time will help you to avoid problems later. Check your credit for any errors and take the steps that are necessary to correct these errors before approaching an FHA lender.
Also, knowing your credit score will help you target lenders that provide FHA mortgage programs for individuals with your financial situation. While lenders that offer FHA programs must abide by FHA guidelines, they also have their own lending guidelines and interest rates, which are going to vary from lender to lender. Knowledge is power, so if you know that your credit score is not high enough for one FHA lender, but is high enough for another FHA lender, this will narrow down the lenders that you will be shopping with for your mortgage.
3 Steps to Finding an FHA Mortgage Lender: Step No. 3 -- Do Your Homework
Like any major project or decision, you need to take the time to do a lot of research. Go online and read current magazine and newspaper articles so that you will know what the current mortgage situation is, who the FHA lenders are and what their individual lending guidelines are. Make a list of possible FHA lenders from this research and asking friends, family and co-workers which lenders they have used recently for their own mortgage needs.
When you contact FHA lenders, be sure to get all of the costs, pricing, interest rate and payment information. Also, be sure to shop lenders that you are comparing on the same day. Since interest rates fluctuate, it is the only fair way to compare lenders.
Even though there may be multiple lenders that offer FHA backed mortgages, this does not mean that they offer the same terms and conditions for the mortgage. Different interest rates, length of mortgage and other payment conditions may and will vary from lender to lender. So when you are shopping for an FHA mortgage, keep in mind that not all FHA lenders offer a one-size-fits-all mortgage. Shop around with at least three different FHA lenders and compare every item of the mortgage to see which lender offers the FHA mortgage that is the best for you.
These are just a few tips and guidelines on how you should go about shopping for an FHA mortgage. Educate yourself and do your homework before you commit to working with any FHA lender. This will help you to be a smart consumer because you will be armed with the facts and figures that you need to make an educated decision. |
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