When seeking a loan from the Federal Housing Administration, your greatest responsibility as a borrower is choosing a provider that can meet your individual needs. This task may seem daunting at first. There are many to choose from and each one must be properly analyzed. You want to know for a fact that you are making the right choice, not merely going off of a first impression. Here we will discuss how to begin and what to look for in the process of choosing FHA lenders.
Finding FHA Lenders
Variety is the key in finding Mr. Right. A pool of five different options is ideal, but make sure you look into at least three. Qualifications and rates can and do change drastically depending on who you talk to.
All mortgage providers who intend to offer federal loans must first become approved by the agency. A helpful tidbit is that all of the major banks in the United States are FHA lenders, as well as many state and local banks. In November of 2012, Wells Fargo was the number one federal lender, with over 107,000 loans and a total of 18.4 billion dollars provided. Runners up were Bank of America, JP Morgan Chase, and US Bank. Your favorite local branches are a good place to start gathering information and getting a feel for what is out there. Because they are located in almost every city across the entire country, they are an accurate reflection of federal standards as far as rates are concerned.
The HUD website features a searchable list of certified lenders in your area. There is also a list of specific criteria to help you find exactly what you are looking for. These include insurance type, servicer/originator type and specific mortgage options like reverse mortgage and 203k. There is also a handy “Help” link if you have any technical difficulty with this feature.
Choosing an Approved Lender
Your next step is to call the loan providers you have selected and interview them based on the following criteria. How much of their business is made with government loans? How long have they been on the menu? How long has the individual loan officer been performing this type of loan? When you consider that you will be working with these people for a term of fifteen to thirty years, the experience and trustworthiness of both the lender and the loan officer becomes imperative.
Observing the way each person responds to you will give you a good sense of their character. Did they reply promptly to your communications with them? Are they personable and polite? Are they consistent with their loan offerings, or do they advertise rates that end up too good to be true? Are they willing to spend time discussing different options with you and helping you understand their loan process? Are they open about the timeframe from application to settlement? Have they disclosed information about changing rates?
Finally, request a good faith estimate (or GFE) from each mortgage entity, which will provide you with a detailed quote for your loan. This should include any fees and specific closing costs as well as interest rates. On the third page of your GFE is the section labeled “Shopping Chart.” Here you will find comparisons from other loan providers for both annual interest rates and settlement fees. There will be highs and lows throughout. It is up to you to weigh out the pros and cons. Your aim is to find the lowest rates and fees possible without compromising quality and experience in your loan company. In some cases the lender you have the most faith in will not be the best as far as cost is concerned. Find out if they will negotiate for a more competitive rate. If not, consider carefully whether their reliability is worth a little expense. It very well may be.
If you still find yourself unsure as to what approved lender to use, there is always the option of employing a federal mortgage counselor. They can advise you on agency requirements and insure that you are indeed getting an appropriate rate on your home loan. Any trusted insurance agents, financial planners or business professionals can also assist you in finding a trustworthy provider.
We all know why the Federal Housing Administration is such an attractive concept. It boasts loan availability to every American citizen, regardless of their financial history. Rates are low, down payments are low, they are cheap, cheap, cheap! But the reality is that each individual entity gets the final say on the terms of the federal loan. Sampling a wide variety of FHA lenders will help you most in finding the circumstances best suited to your specific financial capability.