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FHA Lenders

What to Look for in the Best FHA Lenders

When you’re searching for your dream home or at very least shopping for a mortgage, it can be difficult to decipher the differences among all of the different lenders.

Especially if you’re shopping for an FHA loan, there are certain lenders that cater to certain needs over others. And, you want to find the lender that best suits the needs of your financial situation.

But, how can you know which lenders to choose from if you don’t know what they specialize in?

Every lender that specializes in FHA loans is not the same. It’s your job to understand what kind of questions you need to ask before asking for a loan.

Depending on your personal and financial situation and the type of home you’re trying to purchase or refinance with an FHA loan will also depend on various other factors. Also, the type of loan structure that you’re looking for may be better suited for a particular lender.

In this article, we’re discussing what to look for when you’re searching for the best FHA lenders. Keep reading to learn more.

FHA Lenders And Refinancing

In order to find the best FHA lenders for your mortgage, you need to know what you’re asking for. If you’re trying to refinance to or from a conventional mortgage, there will be different steps involved. Be prepared to ask your lender what kind of refinancing packages they have available up front.

Your refinancing options will be based on your credit and the amount of equity in your home.

Your FHA lender should be able to run numbers for the types of loans you’re interested in to let you know what you’re eligible for. Those numbers include interest rates, lender fees, and mortgage insurance.

Online Mortgage Lenders

If you want to track and close your mortgage online, you’ll want to find an online lender or a lender that specializes in online mortgages. You can’t expect just any lender to work with you completely online unless they’re set up to function this way.

Don’t look for FHA lenders that don’t have online programs if you want the convenience of obtaining your mortgage online.

Most online lenders offer online support which includes electronic document submissions. You can find fixed and adjustable rate mortgages with no minimum income requirements and some lenders offer decisions in minutes.

Borrowers With Non-Traditional Credit Histories

Low credit or no credit can often mean that it’s difficult to obtain a mortgage. But don’t give up because FHA lenders help lots of people with non-traditional credit histories.

You might be able to use rent history as a form of credit in some cases. And, some lenders will use manual underwriting to evaluate your situation which allows more flexibility to approve your loan. The best FHA lenders are the lenders that will allow for no credit and bad credit options.

First Time Home Buyers

The FHA loan was developed and designed for the first time home buyer in mind. But there are a lot of options.

Look for lenders that offer full line of purchase mortgages with low down payment options. Some lenders don’t require private mortgage insurance, also known as PMI.

Ask your lender what kind of programs they have that are specifically designed for the first time home buyer so that you can get the most out of your experience. The best thing you can do is shop around and talk to at least three different lenders before making a decision.

Low Down Payment

FHA loans were designed to allow for low down payments, but if you have a low down payment, specific lenders may work better for you.

A low down payment is often the biggest hurdle that homebuyers face. Some lenders offer a wide variety of products for this purpose. You can find fixed and adjustable rate mortgages with these programs.

Make sure to talk to your lender about your down payment situation. Some lenders allow for gifted funds from family or otherwise to be used for the down payment on your home.

Fixed Rate Mortgage

Depending on what type of mortgage you’re trying to obtain will also depend on the lender you use. Many lenders offer fixed rate mortgages but it’s important to know the difference before you start loan shopping.

Fixed rate mortgages mean that your rate will stay the same for the entire term of your loan. Fixed rate mortgages often have higher rates but you never have to worry about the rates fluctuating.

ARM – Adjustable Rate Mortgage

Adjustable rate mortgages mean that the interest on your loan may go up or down. Often times people obtain these mortgages with the intent of refinancing when a better loan package is available, but it’s a great way to start out with your first home.

With an adjustable rate mortgage, you can expect your payments to fluctuate according to the interest rate on your loan.

Credit Scores

Your credit score will make a difference on the FHA lenders that will consider you for a mortgage. Most lenders like a credit score of 580 or higher but you can get a loan with a 500-579 credit score with more money down.

Know what you’re up against when you start shopping for lenders because some lenders want better credit than others. And some lenders also want more documentation than others depending on your credit score.

If you have a unique situation, finding an FHA lender to finance your loan could go beyond the best or the worst.

Selecting FHA Lenders

Choosing between FHA lenders doesn’t have to be overwhelming and stressful.

You can enjoy dealing with a lender that is knowledgeable and experienced when you have a little knowledge yourself. Keeping these tips in mind during your search for a reputable lender will help guide your way.

In the end, the best FHA lender is the lender you find most suitable to finance your mortgage. Sometimes it’s simply a personal preference depending on the relationship that you intend to have with your lender.

Just remember that each lender is different and serves different purposes. We have been serving Kansas and Missouri for over twenty years.

If you’re looking for an FHA lender, or if you have questions, contact us today.

Rick Woodruff
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