We frequently have lunch with competitors to find out what is going on in the industry; we like to make sure there is not some technology, market segment or manner of business that we are ignoring. It usually turns out that we are ahead of the game.
Our most recent lunch was with a very high producing loan officer who focused only on Conventional loans until about 3 months ago. This was his revelation: “I wish I had focused on FHA loans sooner. It turns out that my FHA buyers are often much stronger. We never have appraisal issues and the underwriting flexibility results in fewer problems…”
The point is that Conventional Purchases are often more likely to have deal-killing issues than FHA loans. Because FHA allows for 100% “Gift Funds”, sourcing funds is often less of an issue. Also, it is a myth that FHA appraisals are significantly tougher (FHA only requires a few more “checks” – appliances, peeling paint, water heater straps, etc.).
And FHA buyers have to pay Mortgage Insurance no matter what, so a low appraisal is often more easily dealt with. Conventional buyers putting down 20% to avoid mortgage insurance often have more severe reactions to a low appraisal.
Point: FHA offers need to be held in higher esteem.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646