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Are you thinking about your options for an FHA mortgage? Borrowers should spend plenty of time examining several aspects of their finances and credit before filling out paperwork or online forms to apply or get pre-approved for an FHA loan.

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Time to Get Started With an FHA Loan

Time to Get Started With an FHA Loan
May 1, 2017 - Are you thinking about your options for an FHA mortgage? Borrowers should spend plenty of time examining several aspects of their finances and credit before filling out paperwork or online forms to apply or get pre-approved for an FHA loan. The time you spend preparing today is time saved later on when you are filling out the actual forms and FHA loan application for your mortgage. 

What Does Your Credit Report Say? 

Know in advance what your lender will see when your credit report is pulled. If you aren’t sure what your credit report will tell your loan officer,  there’s a good chance you are not ready to fill out FHA loan paperwork. Should your credit report have outdated information, accounts which should be disputed or contested, evidence of identity theft, et cetera, those issues need to be dealt with before you begin filling out loan paperwork. 

In some cases depending on circumstances, your lender may be able to work with you even with some kinds of disputed accounts still pending. However, identity theft issues or errors on your report will need to be addressed prior to your loan transaction. 

What Is Your Payment History?

Come to the home loan application process with 12 full months of on-time payments on all financial obligations. Ignoring that advice will jeopardize your chances at loan approval. Your lender will review your credit history to find patterns that you are a good credit risk. FHA loan rules require your loan officer to provide supporting documentation from your credit reports that justify approval of your application; the lender won’t have an easy time justifying a new home loan if there are late or missed payments within the 12 months leading up to the application. 

Have You Saved For a Down Payment?

 It is very important to give yourself plenty of time to save for a down payment on your FHA home loan. A minimum 3.5% down is required; no FHA loan options for a “zero money down” loan are available.

HUD 4000.1 states that FHA loan applicants cannot use “unapproved sources” for the down payment. Those unapproved sources include credit card cash advances, payday loans, or any other “non-collateralized loan” to make the down payment. Your financial institution is required to verify the sources of all down payment funds including cash saved at home, savings accounts, family member contributions, etc. 

FHA loan rules, state law, and the rules of your participating lender will apply for situations involving issues or questions about any or all of the above. FHA loan rules provide minimum standards, but often state law and other rules apply as well as the guidelines in HUD 4000.1, the FHA single family home loan rule book.
 
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