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Buying a home is one of the most costly investments that we made in our entire life. However, reaching the milestone is not very easy, especially because of the stricter lending requirements. Besides, increasing home prices have made it difficult to save up for enough money for a down payment and closing costs. But thanks to the FHA home loan program. Backed by the Federal Housing Administration, with this loan, you can qualify for a mortgage with more lenient credit requirements as little as a 3.5% down payment and 500 credit score.
But to apply for the home loan program, first, you have to look for one of the best FHA lenders in Houston. Are you wondering how to find the right one? Follow these tips –
- Shop several lenders
The FHA only guarantees the loan program, does not fix the loan requirements. FHA-approved lenders offer FHA loans, as well as set their own FHA loan rates and fees. So, loan requirements vary from a lender to another one. This is why it is important to shop around. Moreover, some lenders have more lenient qualification requirements than others. You should ask for mortgage costs from at least three top mortgage lenders and compare them before you shop around. It will help you to know different rates and then help you to decide what is the most appropriate one for you.
- Check your credit score
Before you apply for an FHA loan, you should check your credit score. For one, your credit score may be better than what you think – and perhaps even good enough to qualify for a conventional mortgage. Besides, you should keep this in mind that your lender options could be limited if your credit score is especially low. While the cutoff for approval of an FHA loan is a credit score of 500, some lenders will not work with you if your credit score is below 580. Besides, they can ask you to come with a hefty down payment if your credit score is low. So, keep checking your credit score before applying for an FHA loan program.
- Know your APR
You should not forget to measure the impact of the Annual Percentage Rate or APR, you qualify for. You should keep this in mind that there is a difference between the interest rate and APR. Your APR will determine how much interest you pay in each of your monthly mortgage payments, and thus, how much interest you need to pay over the life of your loan. The FHA-lenders make money by either charging your fees or by building their profit into the interest rate you pay. Or by both. So, you need to consider your payment interest rate and your all-fees along with APR, when looking for a mortgage lender.
So, keep these tricks in mind and use them properly when looking for an FHA lender for getting a home loan. And, by doing so, you will definitely end up choosing the best FHA lender for approving your loan application.