ShareThisFHA Is Back!
From 2003 thru early 2007 it was very difficult to get sellers in Maryland to accept a contract in which a buyer was using FHA financing. FHA stands for the Federal Housing Administration. Traditionally this type of financing was great for first time home buyers but once we got deep into a sellers market FHA became a dirty word for most sellers, and this is some of the reasons why.
1. FHA recommended that the buyer should have a home inspection by providing a form that states “For Your Protection Get A Home Inspection.” Conventional loans did not.
2. FHA requires their appraisers to look for major deficiencies with a property like a leaky roof or damp basement. Conventional loans did not.
3. FHA only requires a buyer to put 3 percent of the purchase price in the transaction and that can be a gift from a family member. Most Conventional loans require 5 percent to 20 percent down except if the buyer is using 100 percent financing.
During the sellers market Conventional Contracts were accepted over FHA contracts 99 percent of the time. FHA contracts were discouraged because the sellers did not want to be obligated to do any repairs. Conventional buyers were thought to be better buyers by the sellers. Most sellers did not know that a lot of buyers were doing sub-prime Conventional loans.
Now FHA is Back! Buyers can finally start to take advantage of some very good FHA programs. Enjoy!
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