December 6, 2010
The FHA has an extensive list of borrowers’ rights, all designed to inform and protect government home loan applicants. But what do these rights mean? For the first time home buyer, some of these rights need a bit of explanation–an experienced house hunter is probably more aware of their rights the second time around, and newcomers to FHA home loans should know their rights and obligations before they need them.
According to the FHA;
“You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders.”
First time loan applicants may feel intimidated by the process of applying for an FHA mortgage, but those feelings shouldn’t stop an applicant from walking away from a particular lender, seller, or home purchase if they wind up having second thoughts.
Just because you’ve been approved (or even pre-approved) for an FHA loan and made some of the initial commitments (prior to signing a purchase agreement or sales contract) doesn’t mean you are forced to accept the seller’s offer, the loan amount or interest rate terms. You CAN shop around…and should.
Treat buying your first home the same way you would treat a new car purchase–compare lenders and terms, interest rates and perks…and don’t settle for the first property that looks good–there are plenty of homes on the market that will measure up to your expectations.
“You have the RIGHT to be informed about the total cost of your loan including the interest rate, points and other fees.”
The FHA requires lenders to disclose these items to the buyer. A first time home buyer is also required to be informed which fees are non-refundable should the buyer back out of the deal at some point before the loan is closed. Knowing this information is part of being an informed shopper–you shouldn’t commit to a loan you don’t know enough about.
“You have the RIGHT to ask questions about charges and loan terms that you do not understand.”
This is fairly self-explanatory, but some buyers feel the intimidation factor in cases where they don’t understand some of the loan terminology. One of the most important things to remember? Asking questions does not set you up to be taken advantage of. House hunters who DO NOT ask questions are more likely to make a poor judgment call about the transaction because they don’t have all the facts.
The rights listed here are only some of the FHA’s long list. We’ll cover more of them in future blog posts. Read the full list of FHA home loan applicant rights to learn more about what you should expect from the FHA mortgage process as a buyer.
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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