June 10, 2011
FHA home loans are designed to be pro-consumer. While they don’t penalize a lender in any way, FHA loan rules do restrict the types and amount of fees, charges and other costs associated with borrowing. The mission of the FHA is to be fair to all parties, borrower and lender alike. The borrower doesn’t pay inflated fees, and the lender gets a loan guarantee from the government.
The FHA offers referrals for housing counselors and advice to house hunters exploring their options under the FHA loan program. The FHA official site has plenty of sound advice for people trying to navigate the complexities of buying a home, getting the best price, and other aspects of becoming a home owner. A lot of it seems fairly obvious to experienced borrowers, but a first-time house hunter may be in need of the benefit of someone else’s experience.
It’s easy to understand why a first-time borrower might assume that most FHA loans are alike. After all, if the FHA regulates the amount of the home loan, the types of fees and how much can be charged, what’s the real difference between Lender A and Lender B? What can Lender C offer for an FHA loan that the other two can’t?
What house hunters need to understand about the FHA’s advice to aggressively shop around for a home loan is that sometimes what seem to be little differences–a percentage point of interest, for example–can mean thousands of dollars over the lifetime of the loan. Different lenders ask for different prices, and some adjust up or down in one area but remain fixed in another.
The FHA official site advises, “Different lenders may quote you different prices, so you should contact several lenders to make sure you
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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