Ask Andy: Pre-approved FHA loan notices - WMC Action News 5 - Memphis, Tennessee

Reported by Andy Wise

Ask Andy: Pre-approved FHA loan notices

Some of you are getting letters in the mail.  They look like they are from the U.S. Department of Housing & Community Development (HUD) or its housing arm, the Federal Housing Administration (FHA).

The letters say you are "pre-approved" for either a new FHA home loan or a refinancing opportunity.  The loan amount listed may be as high as $325,000 -- maybe more.

Shred it.  Burn it.  Flush it.  Do anything but answer it.

My source at HUD's Memphis office says these letters are from small lending companies -- some affiliated with FHA, some not.  The letters are not, repeat, NOT from HUD or FHA.  

My HUD source says they are marketing ploys to get you to apply for a loan with one of those lenders.  He says there's no such thing as being "pre-approved" for a home loan or re-fi. 

The only way you can be approved for a loan is to apply for a loan yourself, preferably one you have shopped for the right rate and affordable payments.  Is it fixed?  Is is adjustable?  If so, what are the terms?  YOU have to shop for a home loan.  One doesn't drop in your mailbox as some marketing brochure.

Also, the amount of the loan you can get depends on an appraisal of your home and your ability to pay -- your credit!  The person or company who sent you the notice has no clue about your credit or your home's appraised value.

Shop banks and lenders for the right rates and terms.  Also, consider consulting a HUD-approved counselor if you're not comfortable with loan-shopping.  You can find the right counselor by contacting the Memphis Housing Counseling Network at 901-725-8361 or http://memphis.earnbenefits.org/page.php?pageID=607.

You can also go to the FHA site at www.fha.gov or call HUD's housing counseling and referral line at 1-800-569-4287.

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