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When you are trying to get a mortgage insured by the Federal Housing Administration, you need to work with an FHA-approved lender. If it is your first time applying for a mortgage, you might have less knowledge of finding a suitable lender in Houston. As you must be new to FHA loans, you should remember a few tips before appointing a lender.
While asking for referrals might be a good option but your friend’s situation might be different from yours. At this time, you may be facing a set of challenges but the obstacles are not difficult to overcome with a set of tips. Let’s go through a few tips to remember before finding the best FHA lenders in Houston.
Ask the Right Questions when Choosing a Lender
Local Houstonian lenders are highly recommended because they have a thorough knowledge of the local FHA loan limits and other guidelines. Before deciding on the lender, you should ask the following questions on,
- Years of experience
- Mortgage estimate
- Home loan rates and lender fees
- Capacity to underwrite manually
You should present another question about whether the lender is equipped to underwrite with an internal team or takes the help of a broker. The FHA-approved lenders have an automated underwriting system and the borrowers must meet the requirements of the system. Failing to do so, the borrower’s request will be declined. Again, many lenders are ineligible to do manual approval and borrowers with low credit scores must clear this foggy situation.
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FHA Lender Fees vs. Mortgage Insurance Premiums
The government-backed loan, FHA, needs home loan insurance for covering the costs when the mortgage goes into default. FHA loan insurance premiums do not vary from one lender to another. After applying for the home loan, the lender will inform the loan estimate within 3 days. This step is mandated by the government and the borrower can easily compare the fees and terms offered by the lenders. It is important to go through the closing cost details, origination charges, and loan costs and find out the total fees. Some of the lenders are willing to negotiate the fees and you should discuss the matter with them before making the final decision. The current mortgage insurance premiums, added in the monthly payment, are usually labelled as projected payments.
Know Annual Percentage Rate
A borrower should never ignore measuring the influence of annual percentage rate or APR. The difference between APR and interest rate is that the latter indicates how a borrower’s needs to pay for monthly mortgage payments. Henceforth, you will know how much interest to pay over the loan term. Debunking many people’s misconception – the APR is not the same for every FHA loan because each lender is responsible for setting the interest rate.
FHA loan is the perfect solution for people whose credit scores have hit the rock bottom. You can shop around and see whether this is still a viable option for your situation. The FHA-approved lenders assess your monthly income, financial goals, and credit scores to check what type of mortgage suits your needs.