Applying for any loan requires a series of steps in regard to qualifying for that loan. At Red Blue Realty, we know that loan applications can be a time consuming event for borrowers. Following some simple steps to apply for an FHA loan will make the process easier. These steps include:
1. Pre-qualifying for the loan
2. Choosing the best mortgage programs and rates for you
3. Filling out the loan application
4. Starting loan processing
5. Producing required documentation
6. Review of credit reports
7. Getting your home appraisal and appraisal outcome
When a borrower begins to apply for an FHA loan, the first step that starts the process is called pre-qualifying. This means the lender will gather up information about a borrower’s debts and income, determining just how much a borrower can pay. The FHA has a number of different loan programs, so you should choose which loan or loans you’re most interested in applying for.
The next step: look at what type of mortgage program you like best. Options include a fixed mortgage or an adjustable (ARM) loan. The latter type of loan may save money if you’re planning to move or refinance again soon. Your real estate pros at Red Blue Realty and your mortgage lender can help you decide.
The next step to apply for an FHA loan is the application process. Now, you’ll want to discuss fees and closing costs with your lender. The Truth in Lending act requires that this information be provided to you by your lender within three days of submission.
Now, your loan processor will order a credit, appraisal, and title report. He or she will verify your bank statements and deposits, and address any credit issues like late pays, collections, or judgments which require a written explanation by the borrower.
Also required: pay stubs or W-2′s, or tax returns if you’re self employed. To make the process move more quickly, you can provide bank and mutual fund statements for three months prior to applying.
You may also want to order a copy of your own credit report so that you can evaluate and discuss any credit issues with your lender. Ways to improve your credit score include: paying bills on time, keeping your credit card balances low, and only applying for credit conservatively.
Your property appraisal will define the value of a property and the loan amount you can receive. Cost and comparison are the main appraisal methods, with income valuation another method used for rental units.
Now, all your paperwork is completed and your loan application is in the hands of the lender. You’ve followed the steps necessary to apply for an FHA loan.