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An FHA loan is a specially designed home loan program that is insured by the Federal Housing Administration of the U.S. Due to the guarantee; you can get approval for this loan with as low as a 3.5% down payment and a 500 credit score.
But as the loan is not approved by the FHA but by the lenders, you need to look for the best FHA lenders in Houston, who can approve your loan application. With so many FHA lenders claiming the best ones, how to narrow down your search? Here are a few things considering which help you with this –
It is one of the primary things that you need to consider when looking for an FHA lender. Relevant experience differentiates an FHA lender from another one. The more experience the lender is, the more knowledgeable he will be, and so, you could expect better services. Besides, working with such a lender can also get through the process faster. Moreover, some experienced FHA-approved lenders participate in DPA programs that are specific to your state. Ask your lender to check whether you are eligible for a Dow Payment Assistance Program and if you can what you need to do for this. An experienced lender can help you all through the process.
- Rate lock
A rate lock freezes your interest rate until the FHA loan closes. As there is no fixed policy for a rate lock, it varies from lenders to lenders. So, you should ask about this. Generally, it is offered after the initial loan application has been approved, however, before the underwriting process, during which a lender checks the income and assets of a prospective borrower. This is when you can ask if there are a fee and about available rate lock periods. Generally, the period varies from 30 to 60 days, but it can differ based on your lender.
- All-in costs
You can ask your lender to break down the all-in costs for you. When you ask about the cost to the lender, you will have a good idea of how much you are going to paying out the door. The costs that you will want to pay attention to are your closing costs and down payment. Generally, this cost includes appraisal, loan origination, insurance, attorney, inspection, and more.
- Prepayment penalties
Prepayment penalties refer to the fees that lenders might include in their terms to ensure you pay a certain amount of interest on your loan before paying it off. It means if you pay off your loan early, then you may need to pay more. While you talk to lenders, ask if they could include prepayment penalties in their loan terms and how to avoid this. It will help you to save money in case of prepayment.
So, consider these things in mind when looking for the best FHA lender and fulfill your dream of homeownership easily.