Questions to Ask Your Lender Before Buying a Home
The key is to feel you fully understand what your lender offers and how much it will cost. The first thing to ask your lender before diving into the advice below? Get a list of the FHA loan options the participating lender offers--not all lenders offer all FHA loan options.
Things to Ask Your Lender: How Hard Is it to Qualify for this Mortgage?
The reason it’s smart to ask this question is that some types of mortgage loans are harder to qualify for due to higher lender standards.
If you want to build a home, for example, using a One-Time Close construction loan, your lender is likely to require higher FICO scores because those loans are riskier than existing construction loans. Conversely, it may be easier to qualify for an FHA Streamline Refinance (when the time is right for those types of loans) because the risks are lower for the lender.
Ask if the type of loan you want comes with higher credit score requirements compared to other FHA loan options.
Things to Ask Your Lender: Am I Choosing the Right Loan?
Believe it or not, this is actually something you should seek answers for. Why? Because there may be a loan better suited for your particular needs.
For example, you might be interested in a condo loan, but if you are house hunting in a market that favors suburban houses it might be smart to expand your options.
But that is more of a real estate agent question in many cases, what you should ask the lender has more to do with cost versus outcome. If you want to renovate, you could apply for an FHA Cash-Out refinance, but you should ask your lender to run the numbers compared to an FHA 203(k) Rehabilitation mortgage.
Things to Ask Your Lender: What Are My Loan Choices?
You may find one loan makes more sense than the other--a cash-out loan can typically be used for any purpose, but Rehabilitation Loan funds can only be used for approved projects.
So if you want to renovate a home or buy a fixer-upper and you don’t want to deviate from the approved projects list, the FHA 203(k) Rehab loan may be right for you.
But if you want to install a swimming pool, a barbecue pit, or other “luxury items”, you would need other sources to pay for those (like a cash-out loan) as luxury items are not part of the approved projects for rehab mortgages.
Keep Your Eyes on Your Loan Balance
Learn About FHA Loan Prepayments
Taking Out a Home Loan Makes You a Borrower
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