Maurice F. Reidy & Co. Since 1909, Worcester’s Oldest Continuously Operating Real Estate Brokerage


When you’re ready to buy a home, there’s an anxious excitement that’s within you, making you feel like a small child on Christmas night. One question that is probably burned in your mind throughout the home search process is, “How long is this going to take?” 


If you’re a first-time home buyer, you’ll likely be using some programs through the Federal Housing Administration, also known as the FHA. With any kind of home loan, there’s many variables that can affect how long the process will take. This can be due to many factors including the seller’s circumstances and the nature of your loan. 


When you’re securing a home loan backed by the FHA, you may wonder how long it’s going to take for the entire process to finish from beginning to end. 


Variables That Affect The Loan Process


Underwriting

This is one of the variables that can fluctuate the most in the home loan process. Once you have found the home that you love, the lending process can take a few weeks beyond the point where you sign a contract. This part could entail many different steps that may become hurdles for you as a borrower. Your loan officer can also have an impact on the length of the process. Some loan people are just faster than others! 


Keep in mind that you can’t close on an FHA loan until you get through the underwriting process. In the underwriting process for an FHA loan, it will be assured that you meet all of the criteria necessary for securing the loan, such as the standards that have been established by the HUD (Department Of Housing and Urban Development).      


Closing On An FHA Loan


While it’s difficult to say the exact amount of time that it will take for a loan to process, there’s some things you can do ahead of time to prepare. If you apply for an FHA loan before you have even found a home, you’ll expedite the process a bit. If you have been pre-approved prior to making an offer on a home, you’ll likely be in a better position than if you haven’t yet met with a lender. This will also make the underwriting process move a bit faster for you, provided there aren’t any major red flags on your paperwork.  


FHA Appraisals


FHA appraisals do differ a bit from appraisals for a home with a more conventional loan. With an FHA appraisal, the appraiser must look for things in two main areas including any health and safety issues and determine the market value of the property as well. This process will most likely only take a few days. Part of the appraisal process may include the appraiser looking at similar properties in the area in order to get a bit of a comparison on the value of the property. 


Can You Speed It Up?

If you have everything in order before you even decide that you’re ready to go on the house hunt, you’ll discover that the process of securing an FHA loan will be a bit smoother. Talk to a lender before you start the process so you can familiarize yourself with the requirements. Once you can present the lender with the right documents, they’ll be able to do their job with little intervention on your part.


No income verification mortgage loans sound like a great idea. Also known as stated loans, these are easier to obtain than traditional mortgages. You won’t have to go through endless amounts of paperwork that traditional mortgages require. Think again. These types of loans are high risk and borrowers may have a hard time paying these loans back. Many lenders have removed these kinds of loans from their list of options. In certain circumstances, these loans can work for you, but you have to do your homework. 


Where Can You Get A Stated Loan?


Some lenders still provide these stated loans with no verification process required. Unlike earlier times, these loans are now pretty difficult to obtain. Typically, this type of mortgage is geared towards the self-employed and requires a large down payment. Also, the borrower must have a very good credit score to be considered for the loan. 


Are Stated Loans Unaffordable?


Since these loans come at very high interest rates, they are often seen as unaffordable due to the high monthly payment. Stated loans can have double the interest rate of what the current available mortgage rates are. However, if you don’t have many options, or are in a hurry to get a home and have money in the bank, it could work well for you.  


Could A No Income Verification Loan Be Right For You? 


If you really want a home loan, the first step is to be truly honest about your income. If you find a beautiful home and know that it’s out of your price range, you could risk defaulting on the loan. 


To truly understand what you can afford, you’ll need to figure out all of your monthly expenses including taxes, mortgage insurance, phone bills and grocery bills. This will give you a full picture of your finances. Once you look at all of these factors, you may find that it does make the most sense for you to get a no income verification loan. 


Deciding On The Type Of Loan You’ll Get


If you find that you need a lower monthly payment, it may make more sense for you to go after a traditional home loan. If you’re self-employed and know that your options are limited, a stated loan certainly is an option for you, you’ll just need to understand the risks of the entire process. You’ll also need to have a bunch of documents ready for the lender once you decide to go for the home loan. You can compare the costs of a no income verification loan to a traditional mortgage. Then, you can ask your lender what they’ll need from you in order to verify everything for the traditional mortgage. Any good broker can help you through your decision-making process. You’ll want to be well informed and compare all of the programs along with their fees. You should get recommendations on a lender who has the knowledge and experience to help you find the home loan that’s right for you.


If you’re in the market to buy a home, you’re probably learning many new vocabulary words. Pre-approved and pre-qualified are some buzz words that you’ll need to know. There’s a big difference in the two and how each can help you in the home buying process, so you’ll want to educate yourself. With the proper preparation and knowledge, the home buying process will be much easier for you.  


Pre-Qualification


This is actually the initial step that you should take in the home buying process. Being pre-qualified allows your lender to get some key information from you. Make no mistake that getting pre-qualified is not the same thing as getting pre-approved.


The qualification process allows you to understand how much house you’ll be able to afford. Your lender will look at your income, assets, and general financial picture. There’s not a whole lot of information that your lender actually needs to get you pre-qualified. Many buyers make the mistake of interchanging the words qualified and approval. They think that once they have been pre-qualified, they have been approved for a certain amount as well. Since the pre-qualification process isn’t as in-depth, you could be “qualified” to buy a home that you actually can’t afford once you dig a bit deeper into your financial situation. 


Being Pre-Approved


Getting pre-approved requires a bit more work on your part. You’ll need to provide your lender with a host of information including income statements, bank account statements, assets, and more. Your lender will take a look at your credit history and credit score. All of these numbers will go into a formula and help your lender determine a safe amount of money that you’ll be able to borrow for a house. Things like your credit score and credit history will have an impact on the type of interest rate that you’ll get for the home. The better your credit score, the better the interest rate will be that you’re offered. Being pre-approved will also be a big help to you when you decide to put an offer in on a home since you’ll be seen as a buyer who is serious and dependable.  


Things To Think About


Although getting pre-qualified is fairly simple, it’s a good step to take to understand your finances and the home buying process. Don’t take the pre-qualification numbers as set in stone, just simply use them as a guide. 


Do some investigating on your own before you reach the pre-approval stage. Look at your income, debts, and expenses. See if there is anything that can be paid down before you take the leap to the next step. Check your credit report and be sure that there aren’t any errors on the report that need to be remedied. Finally, look at your credit score and see if there’s anything that you can do better such as make more consistent on-time payments or pay down debt for a more desirable debt-to-income ratio.




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