In today’s seller’s market, it is widely known that FHA loan borrowers are at a disadvantage. Seller’s, many times at the advice of their listing agent, opt to not accept offers from buyers using FHA loans. This is especially true for properties that are in need of some aesthetic repairs or have damaged systems like electrical or plumbing. Sellers prefer buyers with conventional loans which are stricter on the borrower’s qualifications but are more flexible regarding the condition of the home. FHA loans are the opposite. They provide more leeway with regards to debt ratios, credit, work history, etc. but are tougher with regards to the quality of the property. There are two FHA loan products, the 203(b) and 203(k) that can help level the playing field. If a home for sale needs $5,000 or less in repairs an FHA 203(b) insured mortgage may work. However, if the home needs significant rehabilitation, the 203(k) is the way to go. The buyer needs to qualify for the total of the purchase price and the rehab amount. The appraisal takes into account a home’s post-rehabilitation projected value and the seller gets paid at closing. The work is then completed post-closing with the funds for repairs held in escrow by the title company. Not all lenders offer these loans on a regular basis so you have to make sure to ask about this loan if it is of interest to you. I can recommend a few lenders as well.
As always, I can assist you with your real estate and business sale needs. Just email at rogelio@vidabroker.com or call/text 720-253-8513.
