October 5, 2011
FHA mortgages have a number of features which make them more advantageous for qualified borrowers than many conventional loans. A low down payment requirement is one of those advantages, as is more forgiving requirements for credit history. Contrary to what some believe, there is also no maximum income limit for a typical single-family FHA home loan.
In addition to these advantages, there are also a list of rights all borrowers have that protect them in the loan application and purchasing process. Did you know all borrowers have the right to know which fees are refundable and which are not should the loan agreement be canceled? You have the right to have these fees explained to you before you commit.
Home buyers also have the right to be fully informed when it comes to mortgage brokers, their services and costs. Borrowers have the right to know how much the mortgage broker is getting paid–by both you and the lender–for your business.
Federal law and FHA regulations require transparency in the lending process–borrowers who ask must be given answers about loan terms, clauses or other features of the contract or commitment to the loan. You are also required to be given explanations about loan charges you don’t understand. Do you know how the FHA down payment requirements affect your loan amount? Do you know how much Up Front Mortgage Insurance you may be required to pay? Ask your lender for details you aren’t sure about.
Just as importantly, the borrower also has the right to be informed as to the reason why an FHA loan application was denied.
Borrowers must be given an answer partially to prevent discrimination in lending under RESPA laws and other regulations, but also to help a borrower understand how to address any issues that might have been related to the denial of their FHA loan application. You can’t fix a credit issue or understand why you were denied an FHA loan without knowing the specific reason for being turned down.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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