3 Tips to Help You Find an FHA Mortgage Broker

by Heindrick So
November 17th, 2008

FHA home loans are available from a number of sources, both from retail and wholesale lending institutions. While some may prefer the idea of a brick and mortar bank such as Bank of America or Well’s Fargo, many individuals still rely on wholesale channels to fulfill their mortgage needs. Recently, FHA has gained in popularity and finding the right FHA wholesale mortgage broker is more important than ever. While borrowers can often rely on the household name of a retail bank, finding a reliable wholesale lender can be a more involved process. 

Individuals who prefer wholesale mortgage origination find that mortgage brokers can often provide more loan options, more convenient processing, and a more personal touch to the mortgage process.  Even those who prefer retail lending often explore the wholesale channels as a way to gauge what else is in the mortgage market. Whichever your reason, here are 3 tips to help you find a mortgage broker who can take care of your FHA needs.

1. FHA Approved Mortgage Brokers

In order to originate FHA approved loans, mortgage brokers need to meet specific licensing and approvals depending on their area. If mortgage brokers are not FHA approved, some will channel their FHA loans through an intermediary source. Ask your mortgage originator if they are FHA approved or if they will be going through a third party for their FHA loans. In some cases, borrowers may face higher closing costs to cover this servicing channel. In addition, the extra party involved can sometimes slow the mortgage process and make it more difficult for direct communication.  In either case, ask this question when shopping brokers, as it can be helpful to find out how your FHA loan will be processed.

2. FHA Experience

FHA loans are a breed of their own and not all loan originators are experienced in this area of lending. Aside from different qualification guidelines, there are specific processing methods which your originator needs to be familiar with. With FHA gaining in popularity, there are a number of mortgage brokers who are still learning how to originate FHA loans. While they may be able to get the job done, an experienced FHA originator will save you time and make the process much smoother.


3. Avoid the FHA Bandwagon Folks

As alternative financing options are limited by this credit crunch, more brokers are shifting towards FHA as necessary move to keep their business alive. Unfortunately, this translates into inexperienced FHA lending as well as some brokers carrying previous lending ideals into FHA. We’ve already commented on the fact that some people are calling FHA the new subprime, but the truth is FHA was never intended to be the new subprime. With brokers suddenly shifting to FHA, a lot of “garbage” is slipping through FHA and you need to make sure you avoid it. These folks will serve you a subprime loan, a conventional loan, or a FHA loan as long as they get their money.  There’s nothing wrong with changing business models to change with the times; it’s the brokers who work solely for your money and ignore the consumer’s best interest that you want to avoid.

To help start your search, take a look at our FHA approved lender directory.

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