FHA mortgage Loan question?

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What does it mean to be pre-qualified for an FHA loan?? My credit has been checked, I was asked my income, and they sent it thru the FHA approval computer and said the fha says ok for them to proceed?? Does this basically mean if everything matches up like income, assets, credit we are approved??

The paperwork that I received said we have been “Conditionally approved” but did not state any conditions which was strange. I hope someone can help

They’ve asked for a purchase contract and the title company and they will do an appraisal after they receive a title from what I’m told.

Also under what cases will the underwriters not approve a loan?? How long does this process normall take?

  1. Reply
    February 6, 2011 at 7:05 pm

    As a former Realtor …

    It means that they checked your credit and the bank has approved you to the next step. Yes, you will most likely be approved from the sounds of it. Although I have known things to fall through at this point.

    The bank still has to approve several factors before sale goes thru… including the home itself. They’re pickier with FHA loans from my experience.

    It used to take about a month sometimes more. I don’t know now.

    DO NOT ENTER INTO A MORTGAGE WITH A FLOATING INTEREST RATE! That is what has caused many people to lose their homes. Only fixed rates.. remember that.

  2. Reply
    Dale H
    February 6, 2011 at 7:15 pm

    You need to get all of your documents together and get them to the lender. Yes, if you can verify what you told them, you should have an approval that you can close with.

    Once you have an executed purchase agreement, they can order title and appraisal. The actual underwriting could take as little as a few days to as much as a couple of weeks. It kind of depends on you and the lender as to how much you have your act together up front. The more thorough you are upfront, the less back and forth you have through underwriting.

    The reasons that a loan might not be approved are too long to list here. Assuming your LO knows what they are doing and you can verify your income and assets as given in the application, you should not have a problem.

    The one problem that you have no control over is the appraisal. If it comes back low, either the seller has to reduce the sales price or you have to pay the difference between the sales price and the appraised value in addition to your 3% investment.

    Congratulations and good luck.

  3. Reply
    Beverly S
    February 6, 2011 at 7:29 pm

    Yes you are pre-approved- the conditional part is because if something happened between now & closing- lose your job or a credit problem or house doesn’t appraise etc. then they could decline the loan. We pre-approve FHA loans based on the info you provide. So if your information (income etc.) isn’t what you told them or if you were to be late on something on credit then they might not approve. Don’t buy anything on credit while you are being processed- it can affect your debt to income ratio. Usually takes about 30 days from the time you sign the loan application & give them the contract. Good luck!

  4. Reply
    February 6, 2011 at 8:20 pm

    Well that all depends on who your lender is. When you give your application to the loan officer, they run it through an software thats usually referred to “DU” or in some cases “DO” That process is usually instant to see the results. If you come back pre-approved, the loan officer will tell you to gather your information to back up what you said on your application (exam: income documentation, pay stubs, w2’s for the past two years, your current employers information, etc) . If you can provide all the documentation to back up your application, you will have no problem getting the final approval. Getting the final approval depends on your underwriters. If they are busy, it can take anywhere between 2-3 days. If they are slow, they can approve it in a day or so. This just all depends on who your lender is.

    Also, there are a lot of reasons why the underwriters might not approve the loan at the end. Title may be one, if there are liens and judgments, they will dissmiss it until the title is cleared. Lets say the appraisal came back and there is a problem with the foundation or the water or whatever reason it may be, that might be another reason why the underwriters will not approve it until its fixed. Your loan officer, whoever is helping you get into your home, should have all of this information for you. They will help you approve any conditions that may be on the final approval. Trust me, your loan officer is your best friend at this point because they want you to get that house just as badly as you do. Thats how they make their money so don’t be afraid to ask questions, to be a bug, to know what exactly is going on at all times because remember, you’re paying them! From my past experiences, it takes around 2-4 weeks for everything to be completed but again, this also depends on your lender. 🙂

    Just to note: there are some things that neither you the loan officer can’t fix on the final approval and you will have to wait until that problem is fixed before you can purchase your property.

    On the bright side, appraisal problems, title problems that can’t be fixed rarely occur so if I were you, getting the pre-approval is a great step, I’d be really excited!

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