What to Do Before You Apply for an FHA Mortgage
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Gather Your Documents
The initial stages of applying for a loan include gathering two years of tax filings, knowing your annual gross and net income, and having detailed information about your outgoing debt, credit scores, and other financials. Remember the monthly rent amounts, utilities, or other recurring monthly expenses.
Your lender will need this information to start the process. If you’re a small business owner and your income is earned that way, you may be asked for two years of profit-and-loss statements and other small business financial data.
Review Your Credit Reports One Last Time
Identity theft can happen at any time. Just because you checked your reports two weeks ago does not mean something hasn’t popped up in the meantime.
Before you commit to lender paperwork, review your credit once more. You want to know exactly what your FHA loan officer will see in your reports at application time.
Confirm Important Details
Are you paying the FHA down payment with your own funds? Are you getting gift funds or downpayment assistance? If so, you must take further steps so the lender can verify these funds.
Talk to the lender at application time about these issues to learn what you need to provide the bank to show the source of your closing cost funds. Extra steps may be required depending on the circumstances.
Check Current Mortgage Loan Interest Rates
You can’t negotiate rates with the lender if you don’t know the current mortgage loan interest rates offered. You should not expect to be offered that exact rate, but you should know the baseline to make an informed decision about those rates.
Remember that the rates advertised assume ideal conditions, such as outstanding FICO scores and a solid bill payment history. Your experience may vary.
Ask the Lender Important Questions
Does your financial institution offer a special perk or discount because you are an existing or new customer? Is there a military discount of any kind? Do you have options because you are a first responder, teacher, or police officer? These are all important to know before you commit.
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