When you decide you want to use FHA financing, your next task is to find FHA approved lenders to get you started. This type of loan takes more than walking into your local bank and applying for a loan. You will have to do a little legwork to find the right FHA lender for you.
The first step is to go to the HUD website and search for lenders in your area. If a bank is FHA approved, they will show up on the FHA website. Getting approval requires extensive work on the part of the lender as they have to provide the FHA with a variety of documents in order to be able to provide FHA loans. This includes the lender’s credit report, resumes of all corporate officers, financial reports, and proof of their bond. The lender then undergoes proper training so that they understand what is entailed in the FHA program and how borrowers can qualify.
Once you have a list of the FHA lenders in your area, it is best to choose several to start off with so that you can figure out who is offering the best rates and terms as not every lender offers the same thing. A few questions you could ask various lenders include:
- How many FHA loans do they do per month?
- Does the loan officer know the intricate details of FHA loans?
- What are the average FHA rates for their loans?
- What are the typical discount points charged for FHA financing?
Once you decide which lenders are the most affordable and most qualified, you can apply with them. It does not hurt your credit to apply with more than one lender as long as you do it within a 2 to 3-week period. It counts as one inquiry against your credit score rather than multiple inquiries. Once you have answers from all of the lenders, you can determine which one offers the best terms, rates, and closing costs. Remember, just because it is an FHA loan from an FHA lender, it does not mean that anything will be the same, so make sure you are comparing apples-to-apples to pick the right loan and lender for your needs.