Friday, June 17, 2016 / by Kristin & Mark Stampini
Are FHA Mortgages Good or Bad?
Homeowners who are thinking of selling their personal property often times are scared of an offer with FHA financing. Over the years, FHA loans have been labeled unfairly as the loans people obtain with bad credit, people with no money or both get when trying to buy a home. That is simply untrue. Co-Founder of Florida Platinum Group Mark Stampini states, “FHA loans are great for buyers and now that appraisals are similar to conventional loans, sellers would be crazy not to look at those offers”. FHA may be an option for someone with a lower credit score or little money to put down, it also may be the best deal for any buyer purchasing a primary residence. When a seller sees an FHA offer they should be excited as the buyer is looking to live in their home. They are not an investor making a business decision.”
MYTH #1 - FHA Repair and/or Appraisal Requirements Will Probably Kill the Deal!
Appraisals can be a little tougher with the requirements on property conditions. Yes, it’s true that FHA loans do require some repairs that must be fixed before closing, an appraiser for any other loan type is required to report the same issues that can affect the health or safety of the buyer. FHA loans do include appraisal requirements, and so do all loans. The FHA appraisal form is exactly the same form as is used for the conventional appraisals and many times the review is being done by the same appraiser as the conventional loan. The FHA may ask for an evaluation of a few specific items (verifying electric and running water to name a few) and now the conventional loan requires that as well. So really there is no truth to the myth that FHA repair and/or appraisal requirements will probably kill the deal! Appraisers may have been more difficult on FHA appraisals before 2002 – since HUD changed its’ requirements it is no longer true today.
MYTH #2 – FHA Loans are ONLY for First Time Homebuyers
First-time homebuyers may like the FHA product for the lower down payment requirement, but repeat borrowers also obtain FHA financing. FHA only requires a 3.5% down payment and the credit score can go as low as 550, the debt to income ratio can usually be higher with the FHA financing. Many times a buyer is approved FHA and Conventional but the FHA product for them is better.
MYTH #3 – FHA Loans Take More Time than Other Loans
FHA loans no longer have a lengthy and cumbersome process; there have been many changes that have made the process much faster and in many cases it can close faster than a conventional mortgage. Turn time in underwriting is the same as a conventional loan. The only reason an FHA loan would take any longer is because the borrowers may take longer in the process since this may be their first loan and they may lack some organization.
MYTH #4 – Buyers Can’t Buy a Condo With an FHA Loan
FHA maintains a list of approved condominiums on-line that are approved and updated often, the list does expire from time to time. You will need to make sure that the condo still qualifies for an FHA loan. Please note that FHA condo loans might be on the approved list for FHA however the lender still has to approve the loan. You can also use a condo questionnaire, which the buyer most likely will have to pay for and get additional condos approved as well.
MYTH #5 – FHA Loans are More Expensive than Others
This depends on several factors such as the interest rate and MI (mortgage insurance that insures the loan against mortgage default). The insurance costs may or may not make the loan more expensive, I recommend consulting a mortgage professional about this to find out. If you are a buyer, seller or real estate agent please know the facts about each loan type so that you can advise or be advised to what the true facts are regarding an FHA loan. It can be unfortunate to see buyers, and sellers lose out on the best deal or the perfect home because they don’t know the facts about an FHA mortgage.
To see how much you can afford you can use an FHA mortgage calculator located http://www.fha.com/calculator_afford. At Florida Platinum Group, we assist all of our buyers and sellers so that they can make an educated decision before a seller accepts an offer and before a buyer writes a contract. Sellers, please visit us here, and Buyers please visit us here, for more information.
To get pre-approved or if you have any mortgage questions at all, please feel free to contact:
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Author: Kristin Stampini – CEO Florida Platinum Group – RE/MAX Services
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