Steps Toward Your FHA Home Loan
There are many ways to answer this question, but for our purposes here we’ll examine what happens once you have found a suitable home rather than covering planning stages for a loan such as budgeting, pulling credit reports, researching, etc.
FHA loan rules published in HUD 4155.2 at the time of this writing include a list of steps that happen at each stage of the loan application process.
These steps are found in Chapter One, Section A of HUD 4155.2. Later in 2015 that reference will change to HUD 4001.1, but for now the following references are still relevant. From Chapter One, we learn that the FHA loan process begins with the borrower getting in touch with the participating FHA lender and the lender determining if the borrower’s loan needs are eligible for FHA mortgage loan insurance.
For Step Two: “The borrower, along with the lenders representative, completes the loan application. The loan officer collects all supporting documentation from the borrower and submits the application and documentation to the lender.”
Let’s assume our hypothetical borrower is financially qualified for the loan: the lender’s next step is to apply for an FHA loan case number from the FHA. Once that has occurred, an appraiser is assigned, “to perform a property appraisal, to determine the value of the property that is to be security for the mortgage loan” and then the lender completes the appraisal logging process.
HUD 4155.2 Chapter One says this is the part of the process where the participating FHA lender does the credit review, “to determine the borrower’s ability and willingness to repay the mortgage debt”.
Yes, there are many things that need to happen before the credit review occurs, so borrowers should be prepared to wait out the above steps before the lender determines loan approval. When this process is complete and the application has been approved, the lender and borrower can work together to establish a closing date and other particulars related to making the home yours.
All of these steps happen after the borrower has found the right property, made an offer to the seller, etc. but you should know that a borrower is permitted to approach a participating FHA lender in order to get pre-qualified for a mortgage loan amount.
Getting pre-qualified may save time--you can get a basic idea of what you may be qualified to borrow based on your price range, house sale prices in the area, and other important factors. Getting pre-qualified is not the same as getting loan approval, but it’s a step in the right direction.
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