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dennismurphy
Put me on hold? I'll put YOU on hold
Premium
join:2002-11-19
Parsippany, NJ
kudos:3
Reviews:
·Verizon FiOS

1 recommendation

reply to TheSMJ

Re: Mortgages

said by TheSMJ:

When I looked at mortgages 2 months ago, the rate for FHA was .25% lower than it was for a standard mortgage. Furthermore, unless you can put down 20% or more at closing, you'll be paying insurance for either type of loan.

After crunching the numbers, FHA was the cheapest option.

I can tell you that, as a seller, I was wary of folks bidding with an FHA mortgage.

In fact, when I sold my house in 2011, I received 3 competing bids - the first one was ~10k less than asking price, the second was $2k over asking, the third was $4k over asking.

I took the second bid. It had a solid 20% cash down with a pre-approved conventional mortgage.

The third bid, even though it was $2k more, was an FHA loan with only 5% down. I didn't want to deal with FHA inspections and repair requirements, etc. That extra $2k wasn't worth the hassle.

I was extremely lucky to have a multi-offer situation in 2011. A week after listing. Kind of unheard of these days, but it enabled us to buy our 'forever' home!

TheSMJ

join:2009-08-19
Farmington, MI
How old is your information about FHA mortgages?

I ask because up until 2007-2008, the process for an FHA loan was very different compared to how it is now. Before it was reformed, FHA did require a very in-depth inspection and was a PITA for sellers. Now the inspection is very similar to the one used in conventional mortgages, and the main thing lenders look at is the value of the house vs. the amount of the loan.

As for the size of the down payment, why would you (the seller) care? Once the loan is approved for the buyer, you'll get your money regardless of the buyer's ability to pay the mortgage payments. It's no concern of the seller at all.


Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19
The FHA has light requirements. Unless the home is an absolute shit hole, you shouldn't have any issues.

FHA did not place any demands on the home I bought. I had a home inspection that was done and I asked for some repairs to be done out of that, but not due to FHA.
--
A government big enough to give you everything you want, is strong enough to take everything you have. -MLK


dennismurphy
Put me on hold? I'll put YOU on hold
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join:2002-11-19
Parsippany, NJ
kudos:3
Reviews:
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reply to TheSMJ
said by TheSMJ:

How old is your information about FHA mortgages?

I ask because up until 2007-2008, the process for an FHA loan was very different compared to how it is now. Before it was reformed, FHA did require a very in-depth inspection and was a PITA for sellers. Now the inspection is very similar to the one used in conventional mortgages, and the main thing lenders look at is the value of the house vs. the amount of the loan.

As for the size of the down payment, why would you (the seller) care? Once the loan is approved for the buyer, you'll get your money regardless of the buyer's ability to pay the mortgage payments. It's no concern of the seller at all.

It could be out of date; I'm not in the RE business nor do I track what FHA's requirements are this year. I just know I had heard horror stories of FHA inspections in the past.

I also knew that a small down payment and a pending FHA loan did not make me comfortable. I thought it was more prudent (and the outcome proves that my decision was right) to go with someone willing to put a full 20% in the game. A pre-approval does NOT guarantee approval. While 20% down doesn't guarantee approval either, it gives me a much greater confidence that the buyer is committed and willing to work through any issues. Putting a small amount down means that it's much easier for the buyer to just walk away. The good faith deposits were also significantly different.

I wanted to see my former home end up in good hands and with good owners for all my former neighbors (who are still close friends.) Mission accomplished. Given the back story involved (each of the RE agents wrote an intro letter for their clients), this was the buyer I was most comfortable with.

I'm happy with my decision and stand by it.


Archivis
Your Daddy
Premium
join:2001-11-26
Earth
kudos:19
And that's fine for you, as a seller, but doesn't contribute to the questions the OP has as a buyer.


dennismurphy
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join:2002-11-19
Parsippany, NJ
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said by Archivis:

And that's fine for you, as a seller, but doesn't contribute to the questions the OP has as a buyer.

It does, though. Just trying to provide insight as to what may happen on the other side of the table.


Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
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2 edits
reply to Archivis
said by Archivis:

The FHA has light requirements. Unless the home is an absolute shit hole, you shouldn't have any issues.

FHA did not place any demands on the home I bought. I had a home inspection that was done and I asked for some repairs to be done out of that, but not due to FHA.

It's an FHA approved appraisal vs. a conventional appraisal. An FHA appraiser looks a lot more stuff when they look at the property. It seems invisible to you if they don't find anything but there are still extra steps taking place.

Some of the extra's on an FHA appraisal:
"EXTRA CHECKS REQUIRED FOR AN FHA APPRAISAL
Identify any chipping, peeling or cracked lead-based paint - interior and exterior
Verify there are no issues with water damage or drainage
Insure proper ingress and egress (18") from all buildings to the lot line.
Test for a properly working heater and, if present, air conditioner
Test for adequate water pressure and no water leaks
Validate every bedroom has exterior access
Test for a working oven hood/fan (carbon monoxide danger)
Verify a minimum 60 amp electric box
Test for working electric outlets in every room
Identify any exposed wiring or missing electric box cover plates
Verify roof vents are screened and a maximum of three layers of roofing material
Complete a head and shoulder inspection of attic and crawl space"

Basically the house has to be in good shape for an FHA loan. If it needs a little TLC like a broken rail or cracked window the seller has to fix that before you can buy the property under FHA guidelines. The seller might increase the sale price to account for this. In a conventional loan you might point out problems but get a closing credit and fix the stuff yourself. That's not possible with a FHA loan.
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!

Bob4
Account deleted

join:2012-07-22
New Jersey
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said by Draiman:

Test for a properly working heater and, if present, air conditioner
Test for a working oven hood/fan (carbon monoxide danger)

How do you test a central A/C in the winter?

We don't have a stove exhaust fan. But it's an electric stove.


brian
Premium
join:2002-05-02
Lake Forest, CA
reply to dennismurphy
said by dennismurphy:

I was extremely lucky to have a multi-offer situation in 2011. A week after listing. Kind of unheard of these days, but it enabled us to buy our 'forever' home!

The problem is people are listing too high. The condo we just did short sale on sold for about 40% over list. We had about 20 offers in 4 days. However, if we had listed it at the final sale price, it would probably still be unsold.
--
flickr gallery | photo blog (rarely updated) | play mafia!


Draiman
Let me see those devil horns in the sky

join:2012-06-01
Kill Devil Hills, NC
Reviews:
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4 edits
reply to Bob4
said by Bob4:

said by Draiman:

Test for a properly working heater and, if present, air conditioner
Test for a working oven hood/fan (carbon monoxide danger)

How do you test a central A/C in the winter?

We don't have a stove exhaust fan. But it's an electric stove.

FHA rules say they must mark the A/C stuff (Questions 10F through 10J) as "Yes" if it's below 60 degrees and can't test it. Typically they'll put a comment on page 5 that states the A/C could not be tested. That's a loophole for sure.

You don't need an exhaust fan in the kitchen. It's highly recommended and might be code for some places. If you do have one it has to work and vent outside. The range type makes no difference. Food smokes the same in a pan on gas or electric.
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!


dennismurphy
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Parsippany, NJ
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reply to brian
said by brian:

said by dennismurphy:

I was extremely lucky to have a multi-offer situation in 2011. A week after listing. Kind of unheard of these days, but it enabled us to buy our 'forever' home!

The problem is people are listing too high. The condo we just did short sale on sold for about 40% over list. We had about 20 offers in 4 days. However, if we had listed it at the final sale price, it would probably still be unsold.

Agreed 150%! We tried to list at a realistic price - enough to reflect some value of the upgrades we had done vs. the comps in the area, but not so much we priced ourselves out of market. It worked, apparently.

This is the value of a good real estate agent who knows your area well.

garys_2k
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join:2004-05-07
Farmington, MI
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·callwithus
reply to dennismurphy
said by dennismurphy:

said by Archivis:

And that's fine for you, as a seller, but doesn't contribute to the questions the OP has as a buyer.

It does, though. Just trying to provide insight as to what may happen on the other side of the table.

I wouldn't worry; everyone has to start out and, if this was their first house purchase, I'd have no trouble with it.