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Posted by jesse.hot on February 27, 2007, 10:33 am
Many people hear the term "FHA loan," and incorrectly assume the
Federal Housing Administration is a mortgage lender. That is not the
case. Established in 1934, the FHA helps lower-income, first-time home
buyers get approved for a home loan by providing private lenders with
mortgage insurance. This gives the lender the security of knowing the
loan will be honored if the buyer defaults on the loan and allows
buyers who might not otherwise qualify for a conventional loan get
approved. FHA loans are available to individuals with less than
perfect credit and often require a smaller down payment (usually at
least 3%) than conventional loans. FHA loan limits vary throughout the
country depending on the guidelines that apply to the particular
market. The FHA and lender will require a real estate appraisal as a
routine part of the mortgage application process. For more information
on FHA loan insurance, visit the U.S. Dept. of Housing and Urban
Development's Web...
http://1st-homemortgage.blogspot.com/2007/02/fha-loans.html
http://1st-top-info.blogspot.com/
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Posted by John A. Weeks III on February 27, 2007, 10:49 pm
> Many people hear the term "FHA loan," and incorrectly assume the
> Federal Housing Administration is a mortgage lender. That is not the
> case. Established in 1934, the FHA helps lower-income, first-time home
> buyers get approved for a home loan by providing private lenders with
> mortgage insurance.
Thank you for the infomercial. Now, for a bit of realism.
As a real estate investor, I run screaming anytime comes to
me trying to buy with a FHA loan. The process is often long
and convoluted, with paperwork mess-ups and blown closings the
norm. The FHA mandates special home inspections that are
different from prevailing codes, and one you let them in, you
often have no legal way to terminate a sale. That can leave
you on the hook to pay many thousands in upgrades to meet the
FHA guidelines which, in practice, simply are not needed. If
someone comes to me with FHA, I simply tell them that I already
have a full price offer. That way, they either go away, or they
offer to pay over asking price, which is often enough to take
the risk of the unneeded upgrades.
-john-
--
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John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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Posted by Mark Bole on February 27, 2007, 11:15 pm
John A. Weeks III wrote:
>>Many people hear the term "FHA loan," and incorrectly assume the
>>Federal Housing Administration is a mortgage lender.
> Thank you for the infomercial. Now, for a bit of realism.
> As a real estate investor, I run screaming anytime comes to
> me trying to buy with a FHA loan.
Thank you, that sounds like valuable advice. (No, this is not sarcasm,
in case anyone was wondering).
-Mark Bole
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Posted by Will Trice on February 28, 2007, 5:42 pm
John A. Weeks III wrote:
> The FHA mandates special home inspections that are
> different from prevailing codes, and one you let them in, you
> often have no legal way to terminate a sale. That can leave
> you on the hook to pay many thousands in upgrades to meet the
> FHA guidelines which, in practice, simply are not needed.
Interesting. You can't just refuse to make the upgrades? We recently
sold a property, and we negotiated with at least one FHA buyer, but we
did not get to the inspection. How can they lock you into making the
upgrades (as opposed to refusing and letting the buyer back out of the
deal)?
-Will
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Posted by kastnna on February 28, 2007, 6:09 pm
>
> Interesting. You can't just refuse to make the upgrades? We recently
> sold a property, and we negotiated with at least one FHA buyer, but we
> did not get to the inspection. How can they lock you into making the
> upgrades (as opposed to refusing and letting the buyer back out of the
> deal)?
>
> -Will
You can refuse to make the upgrades (which is an entirely viable
avenue), but the financing will be denied by FHA. Most (and all of my
personal) sales contracts are contingent on financing approval deemed
acceptable to the buyer. No financing, no contract.
Nothing is more annoying than thinking you have a sale, taking the
property off the market (or indicating "under contract"), and signing
a sales contract only to have the contract voided because the
financing contingency could not be met.
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