Why a FHA loan could cost you the house….
Again, I struggle with our government’s need to meddle in things they really don’t understand. While I like the idea that somewhere there is a ‘parent’ with the capabilities of taking the keys to the car when things get out of hand – the problem is that, usually, by the time the keys have been confiscated the car, bike, boat, motorcycle, and any other vehicle has left the building. The ‘parent’ I am referring to is the government.
Today we have programs that have been instituted by the government that are supposed to help home buyers purchase properties with lower down payments. FHA loans are one of those such plans. The premise of an FHA loan is that a borrower can purchase a home for 3.5% down rather than a conventional loan that requires a higher down. Unfortunately, by the time the borrower pays the slightly higher interest rate, PMI and other fees, payments can be much higher than other type of loans.
In addition, the truth is, no one wants to deal with an FHA loan if they can help it. In a multiple offer situation, often, the Agent will go with offers that do not have an FHA component. Part of the reason for this is the additional ‘help’ the government offers by sending out an Appraiser/Inspector to notate problems that the house has that must be completely repaired in order to fund the loan. These Appraiser/Inspectors look for things like chipped paint, a hole in the wall, cracks in a block wall, and many other, mostly cosmetic, things. Once the FHA Appraiser/Inspector finds these minor things they make a note on the appraisal that the bank views and those things are usually called out by the bank and made a repair requirement before the loan is funded. Sometimes, there is even a ‘recheck’ which costs the buyer an additional $25.00-$50.00 to get the appraisal signed off that the repairs required were completed. It is a terrible system and makes those that need the help to afford a home the ones that have to suffer.
We often tell our clients that they should consider a 5% down and go conventional, if at all possible, rather than the 3.5% that FHA offers. We try to help them come up with the extra funds by suggesting we write the offer to finance closing costs or see if the seller will pay the buyer’s closing costs so the buyer can put more money down on the deal and get out of FHA requirements.
With Santoro And Sons Real Estate you get the whole package – we help you with getting the best rate and loan out there, finding the best value for your dollar when you are ready to buy, and then we negotiate like crazy to get you the best deal possible. For our sellers, we are just as aggressive and know your market. We know what you can get for your house and we know how to get it for you!
Ask us for some of our client testimonials – they speak for themselves! We are proud to say we have 100% client satisfaction. Come on over to our team and I know you will be glad you did!