First-time homebuyers and buyers with credit challenges tend to favor an FHA loan. Their lower down payment and credit score requirements help buyers get into a Lake Havasu home much easier (and for less money) than a conventional loan. However, the property you purchase must meet certain requirements to qualify for this type of loan as well.
Property Standards for an FHA Loan
Why do lenders require that properties meet certain standards? First, they want to protect themselves in case you default on your loan. When that happens, they take possession of the property and put it on the market to help recoup their costs. With these standards in place, it gives them a better chance of selling it quickly and for a higher price if this happens. But these standards also protect you. With a home that fits in with their higher standards, you are less likely to need to pay for significant repairs when you first move into the property.
Appraisal Standards
Most lenders require appraisals as part of their loan process anyway. But an FHA loan requires a two-step appraisal. First, an appraiser views the Lake Havasu home in question in person. They look at and take notes on the condition of the property, any upgrades/improvements made, its size, amenities, etc. Next, they look at recently sold homes in the neighborhood to estimate a value for the property.
Condition of the Property
FHA loans set up minimum requirements for the condition of the property. The property must be safe, secure, and structurally sound to qualify. Cosmetic changes are not a factor. But if there are indications of water or fire damage, a cracked foundation, or black mold, the buyer cannot use an FHA loan for financing the purchase of a property. Other things that must be fixed before receiving FHA approval include frayed electrical wires, termite damage, asbestos, and old roofing that needs replacing within two years of inspection.
If you are interested in purchasing a Lake Havasu property, please contact me at (928) 208-5154 or via email. I'm happy to answer any questions you may have and find you a property you will love.
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Originally posted on my Lake Havasu area real estate blog here: https://havasuareahomes.com/property-standards-for-an-fha-loan/.
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