FHA Loans and FHA Mortgages

How many of you at one time or another bought a house or refinanced your mortgage and ran into one problem or another. May it have been the realtor who was not able to give you the correct answer or the loan officer who strung you along and then changed things last minute. I have never said that I am perfect or that I know it all, but it does come down to honesty, integrity, knowledge, and very good service. 

What about you first time homebuyers that have never experienced buying a home or refinancing for the first time. I truly believe that there are some key phrases that can sometimes be cause for concern, known as Red Flags. And just because you have done this before, does not mean that it will not happen to you. If you hear some of what is mentioned below more than once, especially in a short time period, this could be your warning.

The General / Basic Red Flags from both the loan officer or the realtor :

As you shopped for a realtor or a loan officer, this person was always getting back to you. Now you have signed a listing agreement, a buyers agreement, or the loan application and they do not get back to you right away. 

  –  If you are leaving a few messages per day, both e-mail or by cell, and this continues for close to 48 hours, there is no excuse. This is a huge Red Flag if this takes place a few days prior to settlement / closing, especially the day of closing, if they cannot be reached at all.

  –  Key words or phrases used often when first speaking to you ; ‘I promise’, ‘I guarantee’, ‘no problem, Ill fix it’, ‘I am the best’, ‘I am the cheapest’, and ‘I have the lowest fees’. I am sure there are more.

  –  Delayed phone calls. I promise to call later or tomorrow. But you do not hear back from them and now you have to track them down. Yes, again, things happen. But if this seems to be a reoccurring issue, then you might have problems.

  –  Deadlines - If there are certain dates on the contract or with the lender, get everything in as soon as possible. If that is ordering inspections in a timely manner or getting documents to the lender, do not wait.

Red Flags from loan officers or lenders :

You are shopping for lenders and the loan officer never offers you a Good Faith Estimate. Rut row. They don’t offer you the rate or the payment?  This might sound silly, but I had 3 clients just in one month, that this happened to them. Can I judge and say that they should have asked? Yes I can, because I see this happen more often than it should. But maybe the loan officer talked circles around that client, and then they just forgot. Sometimes just hearing, ‘you are qualified’ or ‘you are approved’, gets you excited, hence why you might forget to ask the important questions.

  –  You find a loan officer because their rates were very good. But since you have so much on your mind, they never go over the rate lock-in features of that program. If they do not cover this prior to application, and especially during application, this could be trouble. Or they get you to sign a rate lock form, but they convince you to float. Question, did that rate ever even exist then? 

  –  You might qualify for a FHA or VA loan, but tell you that you do not want those kinds of loans, because conventional is better for you.  This has happened to at least 5 people that I know of. The main reason was because the lender was not FHA or VA approved.

  –  If your lender/loan officer changes rates or fees during the process or at settlement, do not just give in. Avoid excuses such as; ‘your credit score dropped’, ‘you have less income’, ‘your credit is not as good’, etc, etc. What I am about to say is the average. These things are usually found out in the first week when processing a loan, not last minute.

  –  Changing stories / shifting blame.  This one can be used in conjunction with the other red flags mentioned above.

  –  When comparing good faith estimates, do not just compare the bottom line, ‘total costs to borrower’. Some loan officers low ball certain 3rd party fees to make their good faith look cheaper. Or they escrow less taxes on paper that is mandatory in each state. Here is a great read to see what you should compare : Comparing Good Faith Estimates

  –  This is a huge pet peeve of mine. The loan officer not asking you what your goals are or what payment you are comfortable with. This is huge and the loan officer is doing you a disservice when not asking these important questions.

  –  You are at closing and the loan officer says, ‘do not worry about those docs, we can correct that later’. NO !!! Once you sign, its over.

  –  If you have a credit score of 679 or less and less than 20% down and you know you should be going FHA, but the lender says that going the conventional way is better¦.  major red flag. It is been proven that going FHA in this scenario is cheaper monthly. Please read this for proof : FHA loans and FHA rates - Why can they be better than conventional loans¦¦

Red Flags from realtors or real estate offices :

When an agent only shows their listings. If you want to see homes and they keep showing those only listed by their company or that they are selling themselves.

  –  One complaint - When a realtor has a full time job that is not real estate related. I heard a story that the buyers had to wait until their realtor got up to show them the house. This was at 1 pm.

Red Flags from consumers :

This is actually to the consumer reading this. Never hesitate to tell your loan officer or realtor everything. Even if they do not ask you and you think its pertinent to the transaction. Don not take that chance in not telling them. We are all here to help you and not pass judgment. The true professional acts in this manner.

  –  Be loyal and just do not hop to every realtor showing houses. Build a rapport  with that person. That is if  you feel comfortable with that person. 

  –  The same with a loan officer. If you feel that they have given you the most information, have educated you 110%, have been prompt in their follow up and or responses, then don’t always go with that loan officer that is cheapest on paper, Believe it or not, the best price does not always come with the best service. And in either case, it could cost you more in the long run.

Overall, do not keep falling for the same excuses over and over. Or, for multiple excuses during the process. Yes, things happen, but 9 out of 10 times, not that many on one transaction. These types of excuses are usually to delay you in finding out the truth, until it is too late. If anything above happens for 2 or more days in a row, do not wait, contact their manager or boss. If you do not feel like you are getting anywhere at any time, seek a professional in the particular field or possibly seek legal advice. It is one thing to give someone the benefit of the doubt, it is another to be lied to or misled intentionally. Never hesitate to ask questions.