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I just saw this board, I posted on the NJ site but I will repost here since there are so many professionals.....
Hi guy's
My co-worker received an offer on her condo from someone with an FHA loan if they accept the offer. Her and her bf are not sure what to do. I personally never heard of the FHA loan nor do I know anything about it. I did some research online and I sort of understand it and explained it to them a little. My question is , is it safe for the sellers, is there anything they should watch out for or expect things to come out later on? It doesn't benefit the seller at all does it?
I just saw this board, I posted on the NJ site but I will repost here since there are so many professionals.....
Hi guy's
My co-worker received an offer on her condo from someone with an FHA loan if they accept the offer. Her and her bf are not sure what to do. I personally never heard of the FHA loan nor do I know anything about it. I did some research online and I sort of understand it and explained it to them a little. My question is , is it safe for the sellers, is there anything they should watch out for or expect things to come out later on? It doesn't benefit the seller at all does it?
Thanks
It is safe and it benefits the sellers in that they get paid for their house by a loan from a federally qualified lender and insured by the Federal Housing Authority. If the buyers are approved for an FHA loan then your co-worker should be happy. FHA backed loans have been around since the 1930's and are a common way to purchase a home.
I'm surprised that your co-worker's Realtor hasn't explained this to them.
There are several very helpful people on here who know all about mortgages and FHA loans. I'm sure they will respond to you shortly.
We just bought a house with an FHA loan. We are first-time home buyers (FTHBs). Some people think the FHA program is only for FTHBs, but it's not. It allows people to have a smaller down payment, something like 3% instead of 10% to 20% as many other "regular" loans do. Not every lender does FHA loans, but they seem to be more common than they used to be.
We had to fill out a lot of paperwork and meet a lot of requirements. They scoured through our credit report, we had to produce letters from people who had given us money so we could explain all our assets, that kind of thing.
FHA has certain requirements, such as that the house can't be priced more than $X (varies by area). We had to get a very detailed inspection of the house, but I don't know if ours was more in-depth than others.
I don't think the sellers are at any risk, because the money comes from a lender just like any other loan. The lender is the one who is at risk. Of course, it's possible that funding will fall through, but that can happen with any potential buyer.
I'm sure you'll get lots of good advice from some of the other posters.
Thanks for the replys, I will let her know about the FHA loan. her realtor did explain but it's confusing her. Not sure if it's the way the realtor expalined it to her. But i did show her and her bf some information online. The potential buyers came in with an offer with a prequalified letters and not the approval letters, I told them to wait until they receive the approval letter. Right thing to do right????
FHA loans are very common here in Columbia, in fact I used an FHA loan to buy the home I live in now. There is less of a down payment than a conventional loan. And it benefits the seller much the same way that any other loan would, it allows a buyer who wishes to purchase the house to do so and the seller is able to sell the house.
As long as the house is priced at the right value(appraises), and the buyer meets the guidelines for FHA loan approval with a lender then it should not be a problem.
Anything else she should watch out for? The buyer didn't come back with the approval letter yet.
plume, your friends need to work with and communicate with their Realtor on this as that is the person that knows the details. The loan will have to go through underwriting, as any loan does. Even if they get an approval letter, that doesn't guarantee that the loan will be funded as many factors come into play during the underwriting process up until closing. It would be in your friends' best interest for them to just deal with their Realtor on this unless they have a problem with their Realtor. If they have a problem with their Realtor then they need to discuss this with their Realtor and/or the Realtor's principal broker. Buying and selling a house can be an anxious time for people. The last thing they need is advice from people who are not familiar with the details or don't understand the process.
Since it is a condo, the only requirement to look for in this case might be: Owner occupied vs. owners renting out their property ratio (there is a cap.. something like no more than 20 or 25% can be rented out in the complex- but don't quote me on those numbers). This also falls under the guidelines for FHA.. could have changed though as I am not a lender. Otherwise FHA loans are not bad loans.
fha is just another type of loan - period. As many stated, there are advantages to the buyers, it has nothing to do with the sellers. With an fha loan, it will be appraised by and fha appraiser, they are getting a bit tougher, but thats just my opinion. Sometimes it takes a little longer to close - more paperwork and with the time of year, they will be more busy than not - but all in all, it certainly would not be a problem for any of my sellers - its quite common actually.
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Originally Posted by Janecj
Since it is a condo, the only requirement to look for in this case might be: Owner occupied vs. owners renting out their property ratio (there is a cap.. something like no more than 20 or 25% can be rented out in the complex- but don't quote me on those numbers). This also falls under the guidelines for FHA.. could have changed though as I am not a lender. Otherwise FHA loans are not bad loans.
This is a good point. The OP may want to check to see if their condo is on the FHA approved condo list. If not it's not necessarily a deal killer as you may be able to get spot approval. The owner occupied ratio needs to be greater than 51%. Here is a link to the HUD page for FHA approved condos.
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