February 22, 2011
There are many steps in the process of getting an FHA home loan. Borrowers who search for a home, make an offer and set a closing date have a variety of milestones along the way that don’t surprise second-time borrowers, but newcomers to the process often have many questions.
Those who seek pre-approval for home loans should know that a pre-approved loan amount or pre-qualification is not a guarantee that a borrower will get the loan they seek. Much depends on your actual circumstances when it comes time to apply for the loan itself.
A borrower who has full-time employment when in the pre-qualifying stage could have a change of employment or income in the meantime; borrowers should be ready to apply for the loan when it’s time to commit to buying the home–don’t assume pre approval means you can change important issues like debt-to-income ratio after that first step is taken. Avoid running up credit cards or applying for new lines of credit between the time you get pre-approval for a loan and the closing date of the house purchase.
When you are ready to apply for an FHA insured mortgage for a particular home, you will fill out the loan application paperwork, your lender will check your credit, verify your application data, and order an appraisal of the property. Once the loan has been approved you can set a closing date and make arrangements for your home to be inspected.
Between the time you commit to the home, get loan approval and set a closing date, there are plenty of other details to handle. The borrower will need to make a written offer to the seller.
If the seller accepts the offer becomes a contract. The written offer or purchase agreement should include language that says your commitment to the purchase is contingent on a home inspection, which the buyer must arrange and pay for.
These steps are for new construction and existing construction homes. There are differences in the process when a custom home or under-construction property is being purchased but many of the basic details are the same. The buyer needs to make an offer, get the seller’s acceptance of the agreement, set a closing date, etc. The borrower should still hire an inspector for new construction properties–never assume that because a home is brand new that it is free from defects or problems.
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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