If you're in the market for your first mortgage, the Federal Housing Administration may be able to help you. Thanks to the FHA home loan program, you can apply for loan approval before you've found a home that you want to buy - which means you know what you can afford before you start your house hunt. Here's what you need to know about FHA home loans and how they can help you find the perfect house.
Pre-Approval: Assessment Includes Employment History and a Credit Check
The pre-approval process can be done over the phone or online in a matter of minutes. All you need to do is find a lender or mortgage broker in your area and start the application process. You'll be asked a series of questions and you'll need to meet several criteria, such as a history of steady employment and consistent income, a credit report in good standing, and a desired mortgage payment of 30 percent of total monthly gross income.
The Variables of the Loan May Change Depending on Your Needs
When the representative for the broker or lender contacts you, he or she may overestimate your property taxes and will assume that you are going to borrow the maximum amount for which you qualify. Therefore, the monthly payment that you are quoted may be higher than the amount that you would pay each month when you actually purchase your home. Based on the property taxes, your down payment and the purchase price of the home, your payment may be higher or lower at closing.
You Will Get a Letter Stating That You Have Conditional Approval
If all goes well, the lender or broker who assessed you will send a letter confirming that you are conditionally approved for an FHA home loan. You may wish to submit this letter with any offer that you make to purchase a house, as without conditional loan approval, a seller may not take your offer seriously. If you are in a bidding war for a home, it may not be possible to win unless you show that you have financing available to close on the property in a reasonable amount of time.
The first step to get a mortgage is to get conditional loan approval. By calling your lender or a broker, it may be possible to obtain pre-approval for the mortgage you need while also negotiating favorable terms. For more information about qualifying for FHA loans, contact your local mortgage professional today.