Sellers, Buyers and FHA loans

100% Financing!!!

Stated Income!!!

No Income verification!!! 

No closing costs!!!

     It was only a few years back when mortgage brokers were not only advertising these types of loans, but were actually closing them as well....  What a wonderful time for all........right? 

If it seems to good to be true...

     ..it probably is.  These loans put ALL OF US at risk and as you all know we are paying the price now - ALL OF US!!  The bailout with tax dollars, the inability of banks to redirect those T.A.R.P funds back to us, the rampant foreclosures across the Nation, the unemployment rate, the tedious and frustrating short sales.... 

These loans hurt us all

....and guess what.... They are still around!!!  AND "sponsored" by the U.S.A!!
......sort of..

FHA Loans

    FHA loans are loans guaranteed and backed by the Federal Government.  As a means to allow first time home buyers access to financing, in general they are a good idea - good for the American citizens, good for the Real Estate market - good for America.  These loans keep the market moving, and can be very helpful to qualified first time buyers.  While they do not advertise, promote or process stated income - they DO allow no closing costs and 100% financing.  It's a non-complicated system to get the 100%.  You see, FHA will allow a buyer to finance 97% of the purchase price of the home.  HOWEVER, they will also allow the seller to contribute 3% to buyer for closing costs... so what's 3 + 97 ????  Mmm Hmmmm....

     Buyers do still have to come to the table with at least 3.5% percent of value - but the loan can be 100% in essence..

Should I accept an FHA loan offer?

     There really isn't much of a reason not to, as long as you are agreeable to your sales price you are going to net the same amount regardless of the loan your buyer obtains.  You will probably see a lower escrow amount with an FHA buyer, and that can pose some risk, but if your agent stays on top of the transaction and works closely with buyers lender......all should be copacetic.

Banks love FHA loans!!

     Because the gov. is guaranteeing the loan banks truly love FHA... they pose little to no risk of repayment, if buyer defaults - ring the White House and the checks in the mail (sort of). 

They are not going anywhere

     FHA loans are here to stay - so it's best to be informed of what they are and how they work.  For a seller they are nothing to be scared of, just pay close attention to the transaction. 

In this market we are seeing more FHA loans then usual as the banks have basically tighten and tied their purse strings - it's one of the last viable options to purchase a home.

For more info on FHA loans please feel free to contact me.

Rick Rapp

Real Estate Done Right

rick@rickrapp.com