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Free Mortgage Quotes From Lenders

Learning Center

The Federal Housing Administration (FHA) doesn't actually lend money, nor does it originate mortgages. Instead, the FHA simply insures the mortgages originated by its approved mortgage lenders. So FHA loan pricing is driven by financial markets just like that of other mortgage loans. The government doesn't set interest rates or tell lenders what to charge for your loan. Therefore it's as important to shop for an FHA mortgage as it is for a traditional mortgage.

Choosing the Right FHA Mortgage Lender in Four Steps

1. Choose FHA Approved Mortgage Lenders

The first step to getting your FHA loan is finding a mortgage lender approved by the Department of Housing and Urban Development (HUD). Only approved lenders can take a mortgage application, process your information, and close an FHA-insured mortgage for you. HUD provides an online list of FHA-approved lenders. Beware of lenders offering FHA loans if they aren't approved to loan directly. An "unapproved" lender can do the loan, but only by brokering to an approved lender--adding an extra step and perhaps some extra expense to the transaction. Recently, HUD revoked the approval for a large mortgage lender that was a source of funding for many smaller, unapproved lenders. Every one of their FHA loans in process, even those all approved and set to fund, was immediately invalidated. Luckily, there are thousands of FHA approved lenders nationwide, ranging from banks, mortgage brokers, credit unions and state finance agencies.

2. Compare Mortgage Lenders

Since the FHA does not regulate interest rates or mortgage discount points, borrowers need to compare mortgage lenders and evaluate multiple mortgage quotes. Every FHA lender is allowed to set terms, conditions, and lending requirements for the loans they offer. As a result, borrowers might discover they qualify for a mortgage with one FHA lender but not with another. And just like any other large purchase, borrowers should shop and talk with several lenders before making any final decisions. Online mortgage sites make shopping with several different lenders faster and more convenient than ever.

3. Select Your FHA Home Loan Product

FHA home loans are unique in many ways, but the mortgage shopping process is still quite similar to that of most other mortgages. FHA offers borrowers both fixed rate and adjustable rate mortgages. When comparing several mortgage lenders, find out which FHA products they sell. Some lenders may only carry fixed rate home loans, while others might carry every type of mortgage ranging from 3 year ARMs to FHA Home Equity Conversion Mortgages (HECM).

4. Choose FHA Pros with Knowledge and Experience

As FHA home loans grow in popularity, it's also become more necessary to filter lenders before finding the right professional with adequate experience. Since other options such as subprime and ALT-A lending have since disappeared, many lenders have had no choice but to switch gears and offer FHA home loans. While these lenders may be approved to originate your FHA loan, some loan agents are more knowledgeable and up to date on the latest FHA loan products than others.

Talk to a few lenders with competitive rates--then find an experienced agent who will return your phone calls, answer your questions, and make you feel comfortable with the process. To browse approved FHA lenders in your area, search this directory and contact a few lenders for more detailed information.


Heindrick So
Heindrick So is a mortgage consultant at a local Bay Area Real Estate Brokerage--specializing in residential wholesale lending. Heindrick frequently contributes to various finance columns, ranging from home loans and mortgages, debt management, and other personal finance topics.