Options for FHA Home Buyers.

The number one complaint I hear regarding buyers who want to purchase a home using an FHA loan is the fact that the home they want to purchase cannot be bought with an FHA loan.

There are a few reasons this can be true however, the most common reason is due to the condition of the home.  Whether you are purchasing with a conventional mortgage or an FHA mortgage an appraiser will visit the property.  When purchasing FHA the appraiser will make a list of repairs that will be required to be completed prior to settlement.  There are Sellers not willing to make these repairs and sometimes with a bank owned property or an estate property they simply will not be completed.

There is an option.  An FHA203K loan is a renovation loan that is available to purchasers.  This loan still requires 3.5% as a downpayment and the purchaser can also receive up to a 6% Seller's Assist towards closing costs.  The differences with this loan make it a great option for a purchaser and include:

• The ability to purchase a home that needs work;
• The ability to purchase a home that needs updating when the purchaser does not have the funds to make those updates;
• Opening up all homes for sale to an FHA purchaser.

The loan works in the following way:

• The purchaser finds a home, puts in an offer and has the offer accepted;
• A contractor who is approved by FHA and the Bank provides a written estimate of the repairs required by FHA and any updates/changes the purchaser would like to make;
• The appraiser makes a determination as to whether or not the additional renovation funds will bring the home to appraised value.

For example.  A purchaser makes an offer of 100,000 on a home and it is accepted.  FHA requires repairs that amount to $2,000.00 and the purchaser wants to install a new kitchen, bath, and hardwood floors totaling $20,000.00.  The appraiser will evaluate whether or not the home value will be $120,000.00 once those repairs/renovations are completed.  If so, the approval is received and the purchaser is on his/her way to becomming a home owner.

Although this is a great loan it is imperative that a purchaser works with a Realtor who is experienced in these types of transacations.  That will ensure that the process continues on a smooth path to settlement.  For more information on homes available visit www.JenniferDaywalt.remax.com.

Jennifer Daywalt, Realtor

Phoenixville's Home Town Realtor

RE/MAX Results Realty - Collegeville

610-489-7355 Main * 610-999-7693 Direct

Licensed in PA

No One Sells More Homes in Phoenixville