Financing your Springfield Missouri home in today's market may prove to be more difficult than you thought. FHA is getting ready to reduce the amount paid by the seller to only 3% of the selling price. Jeff Belonger has information that will help every home seller make informed decisions when they receive an offer with the buyer using FHA financing.
Sellers, don't accept offers from a buyer with FHA financing. Wait, don't accept offers with VA financing. Wait, don't accept offers with conventional financing. Gee, you might as well wait around for a cash buyer.
FHA loans are not a bad thing. It could just be that your listing agent isn't familiar with FHA mortgages, or maybe had a bad experience once before, or that they are afraid that the house might not pass a FHA appraisal. In my opinion, I just think the listing agent is flipping a coin on your property and it could cost you thousands of dollars.
I have been hearing negative things about FHA loans since I first got into mortgages back in 1992. But what prompt me to write about this again was after reading a comment by Sally Cheesman in her post, Holding an offer hostage for a second pre-approval. Read Sally's comment : Listing agent denies offers with FHA & VA financing.
PS... make sure you truly understand about the difference between pre-approval letters and pre-qualification letters.
I wanted to point out two comments from a post comparing FHA loans and Conventional loans. And keep in mind, these 2 comments are coming from realtors defending FHA mortgages.
- Chris Olsen wrote this comment : Comment by Chris - He states that a seller accepted a conventional offer that was $10,000 less than his clients FHA offer.
- Karen Crowson wrote this comment : Comment by Karen - She states the bias opinions from other realtors.
Here are some false assumptions about FHA loans :
- Only for first time homebuyers
- for those borrowers with poor or bad credit
- for those with no money
- FHA loans take a longer time to process or close - FALSE
- FHA loans are more expensive, have higher fees and or rates. Again, False. Every mortgage lender has a profit margin, regardless of the type of mortgage. If someone is charging you more on a FHA loan, it's purely out of greed. Here is a good example. FHA fees and why I was charged more. Please read the 2nd paragraph.
- appraisers are more difficult on the appraisals. This comment is so 2002 and prior. Yes, this was sometimes an issue back in the '90s. But HUD changed the appraisel requirements about 7 years ago. (I would love for some appraisers to chime in here and I will post your answers.)
- If you have 20% down, conventional is the way to go. FALSE.... it depends on your credit score. Please read this. FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check
- a lender that is asking for more information that you didn't expect, because it's an FHA loan. This is not always because of FHA, but could be because of specific investor overlays. Just keep this in mind.
Conclusion : Pick your realtors and loan officers wisely. We all should have the buyers or sellers best interest at hand, but this is not always the case. Is this negative? Yes, but it's the truth and it's reality. Just do your research carefully and keep the emotions out of your decision.
Overall, these negative comments from realtors about FHA loans usually come from old time realtors that haven't left the 90's, from those new realtors that don't know any better, or just from someone that heard a comment by another agent. You know, that trickle down effect. when someone gives their opinion as a fact, sometimes that other person listening will do the same. Just beware...
Solutions : If the property needs some work, or even major work, why not use a FHA 203-k loan. Here is some information on 203 k loans.
PS... I don't make any extra money by promoting FHA loans. My job is to make sure that the borrower gets the best type of mortgage out there that suits their needs and goals.
Sellers, fire your listing agent if they tell you not to take an FHA offer !!!! Just my opinion, but the agent could be costing you lots of money. Unless you just don't care about throwing money out the window, this is extremely poor advice that could be based on assumptions or just a bad experience.
Please read : FHA loans aren't a bad things and the reasons why.
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For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc