THINGS YOU NEED TO KNOW ABOUT FHA HOME LOANS IN EL PASO.

Federal Housing Administration (FHA) loans are mortgages that have been backed by the
government and are mainly for middle class families or first-time home-buyers in El Paso.
These mortgages are normally insured by the government. FHA loans normally have low
credit scores and even low down payments under normal circumstances. FHA loans have
underwriting standards that are flexible and this enables loan applicants who may not have
sufficient credit terms and those that have low incomes to own homes. The applicants must
however pay FHA mortgage insurance for them to qualify for the loans and this is done to
prevent the event of loan defaulting. If a client can however pay more than a 20% down
payment then they are exempted from paying the mortgage insurance

Applicants that pay the normal down payment of 3.5% or anything lower that 20% are normally
required to pay 2 main Mortgage Insurance Premiums, which cannot be canceled. These
premiums can only be avoided by the applicant selling their home or by refinancing into a
non-FHA loan. These premiums are:

Annual Mortgage Insurance Premium: This premium ranges from 0.45 to 1.05%. This depends
on the initial loan-to-value ratio, the loan amount and the loan term. Thos premium is paid
monthly hence the total cost is normally divided by 12.

Upfront Mortgage Insurance Premium: This premium is calculated as 1.75% of the total loan
amount and can only be paid after the applicant gets the loan.

If an applicant for this loan is applying for a second or more time, then they are required to be
using the loan money to buy only a primary residence in the county. The closing costs in FHA loans
are usually charged between 3 to 5% of the total loan amount. This figure may vary up to 6% if
the clients involved are home builders or home sellers.

Private lenders that offer FHA loans are normally insured. Since FHA loans target a very big audience,
a few guidelines have to be met by applicants to keep this program sustainable. A few of these
guidelines include:

The applicant must have a back-end debt ratio that is not more than 43% of their gross monthly
income. In special cases an allowance of 50% is allowed.

The applicant must have a gross end ratio that is less than 31% of their monthly gross income.

The applicant must be using the loan for a primary residence within the county.

If the credit score of the applicant is 580 or more then a down payment of 3.5% is required but if it
is between 500 and 579, a down payment of 10% is required. 

The applicants must be able to show proof that they are currently employed or they have a record
of being employed for the last 2 years.

The applicant must have a source of income that will be used in servicing the loan.

Many money lenders offer FHA loan services in El Paso. This ranges from independent lenders to
banks or even credit unions.

Factors to consider before becoming an FHA loan lender in El Paso

It’s everyone’s dream to create a respectable living out of the business they conducted.
Running a business that does not generate profits is a waste of time. However, before
deciding to shut down, it is important to consider why profits are not being realized.
Some businesses fail to thrive because of mistakes made from the very beginning. 

The mortgage industry has so many lenders, with each offering different products.

Seeing that there are many options to choose from, lenders should come up with ways
of making them the best choice. As a new FHA loan lender in El Paso, you should
understand that borrowers are already looking up to other service providers. This will
make your work even more difficult because you have to compete with experienced
lenders. Below are some factors to consider before becoming an FHA loan lender in El Paso:

Your financial status – starting any kind of business requires a certain level of financial soundness. This is because you will have to pay for office space, equipment, and marketing activities. Marketing is especially important because you have to create awareness of your existence. If you fail to do this, clients will not approach you for their mortgage needs. Additionally, you will need money to pay your employees. It is, therefore, important to have a plan regarding where capital will come from.

Your competitors – you should consider other FHA loan lenders who are your competition. It is important to determine how long they have been in business. Additionally, you should identify what they have been doing to survive in the industry. Make a list of these competitors in ascending order regarding their profitability. After this, think of strategies to implement so that they cannot beat you so early in the game.

Your understanding of FHA loans – if you expect to become the best service provider, you must be educated on all FHA loan matters. Make sure that you and your employees are conversant with all FHA loan requirements. To qualify as a lender, the FHA will require you to be conversant with these requirements.

Office space availability – office space is crucial as potential clients will seek your services from here. Consider the location and design of your office. Your office should be located strategically to attract as many clients as possible. In terms of the design, make sure there is a comfortable reception area where clients can wait before being served. It is also advisable to have office partitions that ensure transparency is enhanced.

Workforce – consider the methods you will use to hire your employees. Whatever method you decide upon, employees hired must be up to the task. Make sure they have undergone the necessary training to handle clients. They should also be well conversant with the functions assigned to. 

For your business to be successful from the word go, you must ensure that every
detail is clear detail. Do not assume anything, no matter how small it is. Small details
such as ensuring cleanliness are the most important. Regardless of how educated your
employees are, clients will not seek services from an untidy lender.