Consumers with excellent credit can obtain loans provided by the FHA (Federal Housing Administration) to buy homes with a smaller down payment, lower interest rates and a lesser monthly mortgage compared to traditional mortgages. Th FHA asks only for a 3.5% down payment, which is why this option is popular among first-time home purchasers.
The FHA provides the mortgage loans for about 30% percent of current residence buyers, so you can easily get an offer for your residence from an FHA purchaser. If your home is not up to FHA standards, you could lose about 33% of potential purchasers. To help you, we have provided some useful tips on how you can boost your selling chances by making your home FHA-friendly.
The FHA stipulates its lending limit as the highest loan amount it will insure. Its loan limits are impacted by the traditional loan limits stipulated by Freddie Mac and Fannie Mae, and they are annually updated. The numbers depend on home rates in various markets and the property type being bought.
The FHA’s mortgage limits for 2019 for national low-cost locations are fixed at 65% of the national conforming amount of $484,350 (for single-unit properties). The agency has raised its loan limit for high-cost locations to $726,525 and set the floor limit to $314,827.
To start, check if your property’s listed rate falls inside the FHA’s lending limits for your location. If your home’s market value is within your area’s pricing guidelines, you’re a step ahead. But if your house’s rate is a bit more than the loan limit, see if you can reduce it. If the price difference is too high, then your home will not be eligible for purchase by FHA buyers. Unless a purchaser can meet the difference in the selling price and the loan limit, they won’t be interested in your home.
Most house buyers will ask for a property inspection even if they don’t get an FHA loan. Also, the FHA will not sanction a mortgage for your property if you don’t repair serious concerns. You can ensure your home clears the inspection by fixing safety issues like a pre-1978 exterior or interior paint that could contain lead, heating system problems, mold and pest issues, structural damage, roof leaks, and others. Timely repair work can improve your odds of getting approval.
Keep in mind that a house appraisal is different from a house inspection. Home inspections assess your property’s condition to ensure that it meets building, health and safety regulations. Therefore, even if your home clears the appraisal, there is no guarantee that it will clear the house inspection too.
A purchaser can hire their own appraiser to assess your property. But the FHA depends only on its authorized appraisers’ reports to decide the condition and value of your home. The agency will use this endorsed appraisal to decide whether to approve the loan or not. You can help the appraiser by enabling them to easily access and photograph all parts of your property, including the crawl spaces, basement, attics and other difficult-to-reach areas.
A lot of FHA buyers face the issue of closing costs, and you can help with these expenses to make your home FHA-friendly. The agency allows sellers to assist with up to 6% of the property sale price to assist with closing expenses.
You can finalize a deal more quickly with an FHA purchaser by meeting some of the purchaser’s closing expenses. This can ensure your property stands out from the throng, especially if your home is being sold in a purchaser’s market. Remember that your objective is to close quickly and transfer your property to a dependable buyer.
We advise you to work with an expert real estate agent who can guide you on the FHA procedure. A realtor can help you learn about the limitations and rules of the FHA’s loan program and aid you to understand if your property is eligible. Last but not least, a smart agent can assist you to maximize your home’s desirability to enable you to attract more FHA purchasers.