Defining FHA homes
FHA stands for federal housing administration. It was originally set up as part of the National Housing Act of 1934. Historically it was set up because of the great depression. Its original goals were to provide financing, improve housing conditions and create a more stable mortgage market.
There is a loan knows a FHA loan which is very popular with first time home buyers as well as buyers who do not have 10-20% down payment. It is also available to those who have a poor credit score. FHA homes for sale are acquired using these loans and they can be used to buy condos, town houses, housing units and single family homes. There are also several different FHA homes loans like adjustable rate loans, fixed rate loans as well as programs for civil servants like police officers and teachers.
FHA homes in foreclosure are cheap to acquire when compared to other forms of property and the qualifications for a FHA loan are less restrictive as compared to those from other financial institutions.
How FHA homes loans work
When buying HUD FHA homes, the federal housing administration does not lend out the money. Its role is to ensure the loans advanced by lenders to buyers interested in FHA homes real estate. This enables borrowers, who are considered high risk, to obtain loans because the federal housing administration protects lenders from default by buyers of property. Loans for FHA homes real estate have lower interest rates and the process of qualifying as a borrower is easier.
When buyers want to buy FHA homes for rent, they first have to identify federal housing administration approved lenders. These can be mortgage companies, banks and credit unions. Once you get information on these lenders, FHA homes buyers can then select the one offering the best rates and fees. An easy way of finding approved lenders is by using the search option in the federal housing administration’s website.
The FHA website also contains useful information like they approves buildings and details on developments and buildings being set up.
For the process of getting FHA homes in California to begin, you start by filling out an application. The application together with other documents is presented to investors, as is verification of employment. This step can take up to 3 weeks. The lender sends out an appraiser to ensure that the property is valued at the amount that is being lent to buy the property. After this, underwriting takes place. The request for underwriting and approval is submitted to the investors. Once the investors are certain that, the FHA homes buyer has secure finances, their credit is acceptable and the loan meets the guidelines, they issue the approval.
Awarding of a FHA homes loan
If one of these conditions is not met or other documents are needed, the loan to the FHA homes buyer is denied or suspended.
On the other hand, when a FHA homes loan is approved, all legal documents are prepared. They include a promissory note for the amount borrowed, deed of trust and a list of fees to be paid. After the FHA homes loan documents are signed, notarized and verified funding is done at closing by the investor, this is after the closing documents are recorded at the county recorder’s office.