Because many people don’t understand where the FHA loan comes from they assume that they are all created equal, but nothing can be further from the truth. What you need to understand when you are applying for this type of loan is that while they are all insured by the Federal Housing Administration they are not all funded by the same lender, which means that the specifics, and therefore the affordability of the loan can vary wildly.
Every lender and every mortgage broker has their own fees and their own ways of doing things and because of this you need to shop around a bit and make sure that you are getting the best deal for you. Don’t rush into getting your loan; instead take some time to consider which offer would be best for you, now and in the future.
Shopping Around Will Help You Save
When you know that the Federal Housing Administration does not actually provide the loans you will then have the information that you need to realize that you can save by shopping around for your FHA loan. It is a good idea to work with two to three different companies when you are trying to get a home loan because this will give you a good look at what is out there and how good of a deal you can get. Many people decide to apply with more than two to three different mortgage brokers, but generally this will give you a good sampling of what is out there.
When you have been approved for an FHA loan you will be given the loan offer that you will need to sign. You should request the loan document from all of those that approve you for it and look at them line by line. Look at the costs associated with the loan, the costs that the lender is charging you, the costs that the broker is charging you. You may be surprised to see how fast these seemingly small fees add up, and you are paying them! When you look at them you may find that while the actual loan is the same, the closing costs are much different.
The closing costs are often where you will see the biggest difference because this is where you will pay all of the administrative costs of the loan. Each lender or broker has their own fees and when you look at this you might see that the difference between the loans that appeared to be the same are thousands of dollars different in their final cost because of what one lender or broker charges compared to what the others charge. If everything else is equal, why would you want to pay one lender or broker more than you would pay the others? You want to choose the most affordable option for you and if the actual terms of the loans are the same, then the cheapest option is the best option.
It’s important when you look at the loan document to look at the specifics of it. Are you getting a fixed rate, an adjustable rate, what is your interest rate? These are important differences that often exist that can make a big difference in the affordability or appealing nature of the loan. You will also want to look at the amount of the down payment, as this can also affect how affordable one loan is for you. As you can see, shopping around can save you a lot of money not only on the closing costs associated with the loan, but also on the costs associated with the loan for the entire duration, which can be as long as 30 years!