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Real Estate · September 20, 2019

A Complete Guide on How to Shop for the Best FHA Lenders

Insured and extended under the Federal Housing Administration, FHA home loans are a popular choice for many homebuyers, especially the ones who want to buy a house for the first time. With this, they can buy a house with a relatively low down payment and credit terms that are more generous than other mortgage loan programs.

However, you should keep this in mind that the loan is only secured by the FHA. And so, the loan pricing is driven by mortgage lenders, just like other home loans. Therefore, you have to opt for a mortgage lender to get an FHA loan. But how do you know who are the best FHA lenders? Here are a few things that you can focus on while shop for a mortgage lender.

  • Ensure that the lender is approved by HUD

The first step to choosing an FHA mortgage lender is to find out whether the lender is approved by the Department of Housing & Urban Development (HUD). None but the approved lenders can take an FHA loan application, process your information, and approve an FHA-insured mortgage for you. HUD offers an online list of FHA-approved lenders. Don’t choose a lender if he or she is not approved by the HUA. An “unapproved” lender can help you, but only by brokering to an approved lender that will ultimately add an extra step and most probably some extra expenses to the transaction. Besides, when you work with an “unapproved” lender, there is a possibility that your fund can be invalidated at any time. So, you should make sure that you are working with the HUA approved lender to get an FHA loan.

  • Compare the lender with others

As the FHA does not regulate interest rates or mortgage discount points, being a borrower, you need to compare mortgage lenders and evaluate several mortgage quotes to find the ideal one. Every FHA lender is allowed to set their own terms and conditions, as well as lending requirements, for the loans that they offer. Moreover, different lenders ask for different interest rates. By asking for quotes from different lenders and comparing them, you can understand which lender offers the best mortgage rate and based on that make the final decision.

  • Check reputation & BBB profile

The next thing that you should consider when choosing an FHA mortgage lender is his or her reputation. A lender with a long and successful history of processing FHA loans is a good indicator that he or she has sound knowledge in the process, and they will be the right choice among others. Besides, you will also check the BBB profile of the lender. The best FHA lenders will have positive Better Business Bureau profiles. However, that does not mean that they will be totally free from complaints. It means that formal complaints are minimal, and the complaints that do exist are addressed and resolved.

Talk to a few FHA mortgage lenders with competitive rates, and then find the right one who is approved by HUD, has a BBB profile, will hear your needs, take the time to explain everything, and make you feel comfortable in the entire process.

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.