April 25, 2018
FHA loan facts you should know before you buy include a variety of concerns, one of which is an optional issue some borrowers choose not to address until it is too late. Don’t make the same mistakes as some first time home buyers-the money you save could be significant.
Never Buy A Home Without A Home Inspection
It’s important to point out that the headline for this section does NOT read “Never buy a home without an appraisal”. FHA appraisals are a mandatory part of the home loan process, but inspections are on the borrower to arrange, pay for, and review. Home inspections are the only way a borrower can make a truly informed purchase.
Those who rely on the appraisal alone for any new purchase mortgage do so at their own risk-and the risk can be great, depending on circumstances.
Your FHA appraisal may not give any information at all on the remaining life of the home’s roof, the future durability of the foundation, or other issues. Do not rely on the appraisal to tell you the home is worth purchasing or not-it is NOT meant to do that.
Never Assume Your Loan Is Immune To Delays Or Other Issues
Circumstances, lender requirements, state law, and other factors may all contribute to situations where your FHA home loan, construction loan, or rehab loan does not close as quickly as anticipated.
Borrowers should expect and anticipate potential delays, especially if there are disputes on your credit report or other areas that may require the lender to get further information.
Your Credit History Or Activity May Be Reviewed More Than Once
Borrowers forget that changes in their credit standing, late or missed payments that have occurred since the lender pulled your credit report, or other issues can and sometimes do create complications in the home loan process.
It is not safe to apply for new lines of credit until after your home loan-a major credit application-has closed. It is never advisable to have late or missed payments, but especially when the loan is in between the initial application stage and the closing date. These issues can come back to haunt you later depending on the severity of the problem, lender standards, and other factors.
You Are Not Required To Stay With The Same Lender
If in the course of your home loan prior to closing there is an issue, or if the borrower simply finds a better deal elsewhere, there may be a temptation to switch participating FHA lenders. Borrowers are permitted to do this depending on circumstances, whether the loan has closed or not, and other factors.
The bottom line here is that the borrower is not trapped with the lender if the loan has not closed yet and circumstances dictate a change. Have a conversation about switching lenders with your new chosen FHA loan officer to see what may be required to transfer the loan to the new financial institution.
Please note that if your loan has already closed, you would need to discuss refinancing the mortgage with the new lender. The situation we are discussing here involves a borrower who already has an FHA loan case number but has not closed the loan yet, has not signed closing documents, etc.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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