Make Your Home FHA Friendly

Know the basics for FHA loan rules and you stand a better chance of selling your home.

Make your house FHA-Friendly, and it will appeal to more home buyers. Why? Because the Federal Housing Administration is insuring the mortgage loans used by 30% of today's' home buyers. If your house passes the FHA rules, it will appeal to buyers who plan to use an FHA-insured mortgage. If your house doesn't qualify for an FHA loan, you're cutting out 30% of potential buyers. FHA is especially important for first time home buyers and those with small down payments because it allows borrowers with good credit to make down payments as low as 3.5% of the purchase price.

Here is how to make your home appealing to FHA borrowers:

Know The FHA Limits in Your Area
Start by checking to see if your homes list price falls within the FHA lending limits for your area (www.fha.com/lending_limits_state.cfm?state=utah) FHA Mortgage limits vary alot.

Home Inspections
Most buyers will ask for a home inspection, whether or not they're using an FHA loan to buy a home. You must give FHA buyers a form explaining what home inspections can reveal, and how inspections differ from appraisals.

How Much Do You Have To Repair?
If their inspection reveals problems, FHA will not give the okay to buy the home until you repair serious defects like roof leaks, mold, structural damage, and pre-1978 interior or exterior paint that could contain lead.

Dealing With FHA Appraisals
Help the lender's appraiser by providing easy access to attics and crawl spaces, which usually must be photographed.

Your buyer can hire their own appraiser to evaluate your home. But FHA only relies on reports by it's approved appraisers. If the two appraisals conflict, the FHA appraisal preempts the buyers appraisal.

Help With FHA Closing Costs
Most FHA buyers need help with closing costs. so a prime way to make your home FHA-Friendly is to help with those costs.

FHA currently allows sellers to pay up to 6% of the sales price to help cover closing costs, but is considering lowering that limit to 3%.

If You're Selling A Condo
FHA also has to approve your condo before a buyers uses and FHA loan to purchase your unit. Be sure your condo is FHA-approved for mortgages the lists has been updated, so if your association was approved a year ago, check again to make sure it's still n the approved list. (https://entp.hud.gov/idapp/html/condlook.cfm)

FHA generally won't insure loans in condo associations if more than 15% of the unit owners are late on association fees. Ask your property manager or board of directors for your associations delinquency rate.

Other rules cover insurance, cash reserves and how many units are owned-occupied and the types of condos that can be purchased with an FHA mortgage.

FHA sometimes issues waivers for healthy condominiums that don't' meet regular rules. If your condo isn't FHA-approved, it doesn't necessarily have to meet every single rule to gain approval. Ask your REALTOR to consult with local lenders about getting an FHA waiver for your condo if it doesn't meet all the requirements.

FHA also limits its mortgage exposure in homeowners associations. With some limited exceptions, no more than 50% of the units in an association can be FHA-insured.

FHA Loans For Planned Unit Developments
FHA no longer requires lenders t review budgets and legal documents for planned-unit-developments.

Houselogic.com by Terry Sheridan