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Buyers now securing FHA loan

Posted by deb_hj (My Page) on
Wed, Mar 13, 13 at 16:51

We accepted a purchase agreement for the sale of our home a few weeks ago. Housing inspection went fine, but today we were informed that the buyers intend to get an FHA loan rather than a conventional loan that they had originally specified. Is there anything that we as sellers should be aware of related to an FHA loan?

Follow-Up Postings:

RE: Buyers now securing FHA loan

If your contract had a financing contingency the type of financing should have been specified there. FHA loans have a much more stringent appraisal process that could require you to make repairs to the property. Check your contract or call your realtor if you are represented by one. Conventional financing is easier for the seller.

RE: Buyers now securing FHA loan

I believe there are certain closing costs that you as the seller may have to pay. It's been more than 10 years since I sold a house to a buyer with an FHA loan, but I know that was a surprise to me at the time. Don't remember what it was and could have changed since then.

RE: Buyers now securing FHA loan

There is a transfer tax (depending on your state) that you may have to pay. It is not a lot of money but you can adjust the acceptance of your offer to say, you will agree to the FHA but all associated costs and/or repairs are the responsibility of the buyer.

The appraisal is a little bit more detailed than a regular appraisal but unless your house is very old and in need of some maintenance there shouldnt be a problem. Issues that FHA appraiser look for are mostly health and safety issues. Ex: Handrails on all stairs, both inside and outside, no peeling paint either inside or outside, (this includes window frames, sills, garage doors etc), septic and well systems have to be at least 75 feet away from each other. (Some say 50, some say 100, so this may vary, Im not sure).

I have had buyers go over to a sellers house and paint a garage door so their mortgage can go thru. Sometimes the seller prefers to do this themselves, sometimes the seller prefers to let the buyer do it. Its completely up to you, but you must specify if you agree to accept the FHA loan.

Its really not a big deal, I wouldnt kill a deal over it. FHA loans are just as common as a conventional loan.

RE: Buyers now securing FHA loan

Advantage - FHA loan is more likely to close if seller isn't pristine on credit vs. conventional.

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