Making use of For An FHA Mortgage: Timing Counts
When buying a new home, you want to be as informed as possible about your credit options, rights, and obligations. Some start their loan application process without being fully prepared and this can cause a home loan application to slow down or even stop.
Big Mistake To Avoid Before Applying for an FHA Mortgage? Application too early. If you’re having financial trouble on your credit report due to previous expenses, the date of your last late or missed payment is an important date – lenders generally want to see at least 12 months on-time payments for their financial obligations.
If you don’t have this proof, it’s a good idea to wait until you do so before applying for a home loan. That’s pretty general advice. But what is not so common?
To learn that your credit reports may not be updated as quickly as you would like. It takes time to get the latest information on your credit report and don’t forget that some creditors do not report all three major credit bureaus.
And what about the data that is already in your credit file? If your credit report contains old information, you will need to dispute it (assuming it is negative) and this dispute process may take longer than expected.
Have you submitted a dispute to one or more credit agencies? When you feel that the process is progressing to your satisfaction, it can be tempting to start the home loan application that you have been keeping track of.
However, if the dispute is not resolved, your lender may not be able to proceed with the loan until this information is resolved.
Much depends on your individual circumstances, but in general, if there is an open case related to your credit report, do not apply for the loan until you have a solution.
There are others who may be tempted to apply for a mortgage early – these include those who have recently experienced bankruptcy.
The FHA loan rules require a minimum waiting period (at least a full year in many cases, but more depending on the circumstances and other variables, including the lender’s requirements).
And you cannot be approved for a mortgage until that minimum term has expired. This is where the lender’s requirements apply, so it’s best to speak to a loan officer about your plans.
Remember, if you have a bankruptcy on your credit history, your waiting time for an FHA mortgage starts with the discharge, not the original filing. This is a detail that is easy to miss.