An FHA loan is among the most highly coveted types of loans that exist today. That is because they are typically very easy to obtain and require less money down to get them. The interest rates are also very affordable. Most young families apply for these when they are obtaining their first single-family home. However, you may not realize how long it will take to get one. Some people believe that it will be fast, but it can take much longer than you might imagine. There are reasons that delays can occur. Let’s discuss how long it really does take to get home loans in Texas.
An Overview Of FHA Loans
First of all, FHA loans are provided through the Federal Housing Administration. They are known for working with individuals with lower than average credit scores. They will guide you on how to get an FHA loan in Texas. For example, if your credit score is 580 or above, you will likely qualify for a loan at about 3.5%.
You should know what credit score is needed for an FHA loan so you can determine if you qualify for it or not. The percentage rate will depend upon what type of loan you can qualify for. This low-interest rate is typically attributed to a 15-year loan that is fixed. If it is higher, it will be with a 30 year fixed loan.
The FHA is also responsible for ensuring mortgages, such as those that are provided by credit unions, banks, and other lenders. Another thing that a lender will check is your income. There are some limits on your income that may hinder your application from getting approved. You might want to ask the lender if there is an income limit to getting a loan. If yes, what is the income limit for an FHA loan?
If the person defaults on the loan, they will be able to ensure that the payment is made. Finally, any lender that does provide you with an FHA loan must be an FHA approved lender.
What Exactly Does FHA Represent?
Since the 1960s, the Federal Housing Administration has been providing these loans. Although during the time of the New Deal decades before, similar loans were also available. This was spawned because of financial duress the country was facing as a result of the Great Depression. In the 1930s, the National Housing Act was passed. This was created because of the many foreclosures that had occurred. Today, millions of people have these guaranteed loans that allow them to purchase homes at a much lower interest rate.
Why FHA Loans Are Different From Regular Ones
The primary difference between regular loans and those that originate from the FHA is that traditional loans are not backed by the US government. It is because they have this type of financial backing that they can offer loans at lower interest rates. The rules for obtaining them are also less strict. However, paying for closing costs may be higher as there may be additional ones through the FHA. There are also different types of FHA loans available which include those for a regular house, a rehabilitation mortgage, or a loan for a title I property.
How Long Does It Take To Get This Loan?
If you were going through a regular bank, and you had good credit, it may only take you a few weeks. However, when you go through the FHA, you could wait up to 60 days before the loan goes through. This is one reason why many people may avoid getting these loans despite the low-interest rates and the minimal amount that is necessary for the down payment. They could have a home that is a good deal, but it would not be able to close escrow on time because of delays in the funding. There are a few final things to consider before applying for one of these loans.
Final Thoughts On FHA Loans
Prior to applying, there are a few things that you need to accomplish before getting one. So it’s best that you already have ideas on what are the requirements to apply for an FHA loan before you consider it. First of all, you need to get preapproved. Second, you will be asked to complete what is called form 1003. Subsequent to that, the property must be appraised by a licensed appraisal company.
There will then be the underwriting process which tends to take a long time. Finally, you will be approved. Although delays can occur, it is the possibility of having an affordable monthly payment that motivates people to wait until it goes through. One final tip is that if your credit is not about 580, you may want to get a cosigner.
These are individuals that will essentially be a co-borrower. If you can find someone that does have good credit, and they are willing to take the risk of getting a loan with you, this will likely push your approval through. Although you may have to wait longer for an FHA loan, it is certainly worth waiting. The low-interest rates, and the low amount that is required for a down payment, is of particular interest to many.
Individuals or families that are just starting out can see great benefits with getting these loans. If you are ready to apply for one, you now know what to expect once your paperwork has gone through. On average, you will receive your FHA loan in between 30 and 60 days.