Problems That Can Delay Your FHA Home Loan (Part Two)
In this second half, we’ll look at how changes in your credit score that happen after you have submitted an application could slow down your mortgage, and how natural disasters affect those who were at or near their home loan closing date.
Changes in Your Credit
An FHA loan application, like all major credit applications, requires the lender to run your credit reports. Some people make the mistake of assuming that is the ONLY time the lender will do so. This is not true.
Loan applicants are not “safe” from another credit check until the loan has closed and you are the official new owner of the property--don’t assume you can make other credit applications happen at the same time you are trying to close the deal on a home loan.
If your credit situation changes between application and closing time, your lender may be forced to re-verify your ability to afford the loan. Applying for any new credit during your home loan process can not only delay the transaction (best case), it could result in your loan being cancelled (worst case).
Natural Disasters Can Affect Your Home Loan
Some home loan transactions seem to go perfectly until disaster strikes--literally.
Consider the scenario where a buyer finds the home they want, applies for the loan, and is well on the way to loan approval. The borrower may even have a closing date. But if a natural disaster occurs, the loan could be affected depending on whether the property is damaged and to what extent.
If the home has been damaged, borrower and lender will need to discuss the situations to determine what’s next.
In cases where the home is deemed to be undamaged/intact, steps may be required to insure the property wasn’t damaged in some hidden or previously undetected way. HUD 4000.1 addresses this directly, saying that in some cases a new inspection is required.
“All Properties with pending Mortgages or endorsements in Presidentially-Declared Major Disaster Areas (PDMDA) must have a damage inspection report that identifies and quantifies any dwelling damage. The damage inspection report must be completed by an FHA Roster Appraiser even if the inspection shows no damage to the Property, and the report must be dated after the Incident Period (as defined by FEMA).” Lender standards, state law, and other requirements may also apply. Don’t delay contacting your lender in such cases--time is of the essence.
FHA Loans Have Eligibility Requirements
The U.S. Government Backs Mortgages Through the FHA
Financed Properties Must Meet FHA Minimum Standards
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