I started the pre-approval process with a loan officer on Tuesday. How long does it take for the process to be complete. I'm anxious to start looking at houses but I don't want to be unreasonable.
He said he was going to look into both conventional and FHA loans for me. I thought that was strange because I can only put down about 5%. Are there conventional loans available for only 5% down? Also, he said that conventional loans were much better than FHA loans. Is this true? The LO can highly recommended but I'm new to all this so I have no idea.
If underwriting is in house then it shouldn't take long at all (assuming they aren't backlogged with applications). Otherwise, they send it to an outside company to do underwriting and it would depend on how many applications they have to process. In my case it was the 1st scenario and it only took a few days.
The only reason I would think conventional is better than FHA is because if you were to bid on a house with an FHA loan and someone put in a competing bid with a conventional loan, the seller would most likely take the conventional. In general, someone who can afford to do 20% down also has a lot of cash on hand and really great credit scores. This is not always true with FHA bidder.
With FHA you're also required to pay mortgage insurance for 5 years while with a conventional mortgage I believe they're required to stop charging it when you pay 22% of the original balance. I personally plan to have both run for me 'cause I like to see the numbers for myself (stubborn that way).
Did you ask what his reasons are for recommending conventional over FHA?