How to Compare FHA Lenders
June 21, 2024
If you have never purchased a home with a home loan before, there are important steps to take during the process. One of the early steps to take is to compare lenders, but if you’ve never tried that before, consider some of these tips to make the process more borrower-friendly.
Choose Your Loan
You’ll want to decide early what type of home loan is right for you. Why? Because there’s no single loan type. FHA loans have different requirements for condos, manufactured homes, and if you would rather build instead of buying, there’s a different FHA loan option for that, too.
Why can’t you just compare lenders in a more generic way, based on interest rates and terms? Because not all lenders offer all loan products, and you want to avoid wasting time comparing lenders who won’t offer the FHA condo loan or the One-Time Close construction loan option.
Pick Your Loan Term
It pays to decide early whether you want the (typically) lower-rate 15-year FHA mortgage option or the lower-monthly-payments option of the 30-year FHA mortgage.
If you can’t decide before comparing lenders, here’s one instance where asking the lender to show you both options could be a valuable (but more time intensive) move.
Pick Your Loan Limit
That headline is a bit disingenuous. You can’t choose a higher or lower loan limit than the FHA allows.
But did you know that FHA loan limits are HIGHER for properties with more than one living unit? It pays to decide whether you need a single-unit home or a house with up to four units. That’s the maximum size you can qualify for under the FHA home loan program for single families.
Consider the Options You Want
Some borrowers won’t compare FHA lenders with other FHA lenders to the exclusion of other options. That’s a good idea but you should be prepared to ask each lender about the following perks of FHA loans and whether they apply to other mortgage options:
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Choose Your Loan
You’ll want to decide early what type of home loan is right for you. Why? Because there’s no single loan type. FHA loans have different requirements for condos, manufactured homes, and if you would rather build instead of buying, there’s a different FHA loan option for that, too.
Why can’t you just compare lenders in a more generic way, based on interest rates and terms? Because not all lenders offer all loan products, and you want to avoid wasting time comparing lenders who won’t offer the FHA condo loan or the One-Time Close construction loan option.
Pick Your Loan Term
It pays to decide early whether you want the (typically) lower-rate 15-year FHA mortgage option or the lower-monthly-payments option of the 30-year FHA mortgage.
If you can’t decide before comparing lenders, here’s one instance where asking the lender to show you both options could be a valuable (but more time intensive) move.
Pick Your Loan Limit
That headline is a bit disingenuous. You can’t choose a higher or lower loan limit than the FHA allows.
But did you know that FHA loan limits are HIGHER for properties with more than one living unit? It pays to decide whether you need a single-unit home or a house with up to four units. That’s the maximum size you can qualify for under the FHA home loan program for single families.
Consider the Options You Want
Some borrowers won’t compare FHA lenders with other FHA lenders to the exclusion of other options. That’s a good idea but you should be prepared to ask each lender about the following perks of FHA loans and whether they apply to other mortgage options:
- No penalty for early payoff
- No forfeit of earnest money if you walk away from a sale where the house appraises low
- FHA Energy Efficient Mortgage add-on option for approved energy saving improvements to the home
- 3.5% down payment
- FICO score requirements of 580 or higher for the lowest downpayment
- 6% seller concessions possible for closing costs
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RELATED VIDEOS:
Show Them You're Serious By Depositing Earnest Money
Homebuyers Benefit From the Work Done by Freddie Mac
Your Second Mortgage Is a Home Equity Loan
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