March 26, 2013
A reader asks, “Are all FHA loans , down payments, and everything regarding my future home have to be dealt with an authorized lender or can I deal with FHA directly? If this is the case, where do I have to send all paperwork?”
The answer to this question is fairly simple–all FHA loans and FHA refinance loans are handled via a participating lender. Borrowers must apply via the lender, who processes the paperwork and submits it to the FHA where appropriate.
The FHA single-family mortgage loan program does not feature a “direct application” process where the borrower submits loan paperwork to the FHA. This is part of a common misconception about the FHA loan program.
The FHA does not lend money directly to borrowers, set or maintain interest rates, or accept payments on FHA mortgage loans.
All of these things are handled by the lender. Addressing the reader’s specific question about FHA loan paperwork, the paperwork is filled out either online or on paper and submitted to the participating lender. The lender and borrower negotiate an interest rate (again, the rate is NOT set by the FHA) the borrower gets a calculation on the down payment which is a minimum of 3.5%, and work out other details as needed. Borrowers do not deal with the FHA directly in these areas.
Borrowers who experience difficulty with a participating lender or who are turned down for an FHA loan can try other lenders–this is true of new purchase loans and refinancing loans alike. Nothing ties the borrower to a specific lender unless there has been a borrower-signed binding agreement such as a purchase contract or loan agreement specifically stating otherwise. For more information on issues like these, contact the FHA directly at 1-800 CALL FHA.
Do you have questions about FHA loans or refinance loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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