Congress created the Federal Housing Authority, or FHA, in 1934 when only 40 percent of American houses were owned by their own citizens. Since 1934, the FHA has insured the mortgages on more than 34 million possessions. The agency does not lend money for mortgages; rather , it insures mortgage lenders against losses whenever they underwrite the loans to FHA guidelines and the creditors pay the appropriate mortgage insurance premiums to the FHA. As of July 2010, the FHA will insure loans with a deposit as little as 3.5 percent.
Find at least three but preferably five FHA-approved lenders in your region. The FHA requires all mortgage lenders to receive approval from the agency prior to supplying FHA loans. All the main U.S. banks are FHA-approved, as are many local banks and mortgage agents. The FHA site keeps searchable databases of agency- approved lenders around the nation.
Call the FHA lenders in your area and interview them. Ask them what percentage of their loans are FHA loans. Ask them how long they’ve been in operation. Ask the loan officer he has been in the mortgage industry. Dealing with a knowledgeable loan officer having an established lender is important when making a devotion for 15 or 30 decades. Ask each creditor provide GFE, or a good-faith-estimate, detailing the quotation for your loan to you.
Compare the quotes on the part labeled”using the shopping chart” located on page three of the GFE. This section permits you to compare the yearly interest rate and settlement fees for every loan. Each lender’s FHA quote will differ. Some may have settlement fees and lower rates of interest. Some may have the opposite. Weigh the costs and interest rates of the loan together with the expertise of the loan officer and creditor. Choose the lender that you trust the many with the best conditions. If your chosen lender does not have the best interest rate or conditions, negotiate with him. If the loan officer will not negotiate, you need to decide if working with that creditor is well worth the extra price. It will be.