We recently ran into a listing agent who was turning away ALL FHA offers even if they were significantly higher than other offers.
This was shocking to us, as we thought the FHA inferiority myth had long been dispelled.
I’ve blogged about this many times, but I’m hitting it again for two reasons: (1) the interaction with the above agent proves that the myth lives on; and (2) I want to make sure agents and sellers alike don’t leave money on the table for no reason.
The FHA inferiority myth was established years ago when FHA loans required clear pest inspections, meaning properties could not be purchased “as is.”
In any case, this is a reminder that: (1) “As is” purchases for FHA have been kosher for decades now; (2) Good lenders can close FHA purchases in 12 to 14 calendar days; (3) FHA interest rates are much lower; and (4) FHA does not mean a borrower is particularly weak.
We often have strong borrowers pursue FHA financing to preserve cash for repairs or other reasons; to access the low rates; or to take advantage of high loan limits (almost $1.15 million in the SF Bay Area).
Before tossing out FHA offers, listing agents should call the lender and ask poignant questions about the strength of the loan file overall and the ability to close quickly.
FHA Condo “Spot Approvals”
This is another reminder that we can often get single units within a condo complex approved for FHA financing – even if the complex itself is NOT FHA-approved.
These single-unit approvals are known as “spot approvals” and they can significantly enhance the marketability of a condo – particularly at the lower end of the market.
$10,000 Credit = Free Money for Borrowers in the Right Census Tract
I have touted our Purchase Plus Program in previous blogs, as the program has provided a $5,250 credit for buyers that did NOT have to be paid and that did not impact the interest rate.
That credit was recently increased to $10,000! And yes, this is literally free money.
The only catch is that borrowers must live in a designated census tract with “low to moderate income” (the kinds of areas in which the government wants to encourage lending).
There are no income limits or anything else. Unfortunately, there are not many eligible census tracts in CA, but they’re all over Texas, Florida and many of the other states in which we lend.
