The FHA Loan Process
Buying a home has many benefits. Not only will it be a place for your family, but it can also be an excellent financial investment. Unfortunately, most buyers will require a mortgage to help them with the purchase. Applying for a mortgage can be time-consuming, stressful, and tedious, but also rewarding once the loan is approved and you move into your home. If you are considering an FHA loan because of the lower down payments and lower interest rates, understanding the application process is key to ensuring the loan is approved effectively and efficiently. This guide will explain the FHA loan process.
Preapproval
A preapproval is essential no matter what type of loan you are applying for. It will help you understand what price home you can purchase while also showing agents and sellers you are ready and able to buy the home.
The FHA preapproval is completed using your income and credit score to determine the right price of home that fits within your budget. It should be completed before you actually start the search for your new home.
Application
Once you have the preapproval and find a home you want to purchase, you can begin the actual application. You must give the lender copies of your income statements, tax returns, and information regarding all of your debt and basic living expenses. A more involved credit check will also be completed during the application process.
Appraisal
After the initial guidelines are passed, the lender will send your loan to an appraiser to begin the appraisal of the home you intend to buy. This appraisal is necessary to determine the home's actual value, but it is also important for ensuring the home meets FHA regulations.
If your home meets the necessary value, the loan process will continue. If the home does NOT meat the necessary value, you may be required to pay money down on the property or renegotiate the price of the home with the seller.
Underwriting
Finally, the loan is sent to underwriting, which can be the most stressful part of the loan process. Basically, the underwriter reviews all documents regarding the loan to determine if the loan should be approved. The underwriter may want additional paperwork if there are any discrepancies regarding your credit, your income, or the actual home. Even though many buyers breeze through the underwriting process, having to explain or provide paperwork is common.
An FHA loan is a great option if you want to buy your home. This guide will help you understand the process, which will make the purchase of your home less overwhelming.