Posted by Dorit Katz on October 28, 2009 at 1:10am
Having a rapport with various mortgage agents and appraisers can certainly pay off. They are a wealth of information. In today's market of ever changing mortgage rules it has become crucial to make sure that a buyer goes to the right lender/mortgage person for a loan. This is a hugh part in the sale of an asset/home. I am finding that most of my low priced REO listings have buyers going for FHA loans. I've dealt with a couple of homes that needed repairs and did not qualify for a straight FHA loan. I've been lucky that either the bank agreed to make the repairs or the buyer was able to get an FHA 203K.An FHA 203K is a great option for any house that needs repairs. It's basically an FHA rehab loan. The problem comes in when the buyer is just barely making the approval for the FHA loan and cannot qualify for the the 203K which is usually at a higher interest rate. So the question becomes "what can be done?" The bank might make some of the repairs that are enough of an issue even for a conventional loan buyer.These loans are both good and bad. First, they have become a very big thing in my neck of the woods and are allowing many buyers to afford a home who could not otherwise buy one. The current market is affording buyers low prices and low rates - a double plus. The buyer only needs 3.5% down, needs only a 620 FICO score, but do need full documentation (as it should be). The appaisers can be very particular when going through a home for an FHA loan. Some will notice and photograph everything from holes in walls, open wiring, and peeling paint, both inside and out.I have a deal that will probably go FHA and the bank is willing to make some of the more obvious repairs, but there is some peeling paint under the roof the roof line and some of the windows do not currently work. As far as the buyer is concerned, these are minor. What I need is an FHA appraiser who can overlook the small stuff.I found out that if the FHA loan comes through a large bank, the bank usually uses an appraisal company from which the appraiser gets chosen. Not the ideal. You never know who your getting or what part of the county they may be from (they may even be from a different county). I also found out that if I use a small bank, the bank usually has their own list of possible appraisers to chose from. In this case, I have a good relationship with one of these small banks that sends out 1 of 3 appraisers, all of which they approved for their needs. All 3 of which will over look the minor stuff. I informed the selling bank that instead of not accepting an offer with an FHA offer, we just need to make sure that it goes through my mortgage banker. They were happy to hear this option since it doesn't knock out the potential buyers.Also important. I just learned that once an FHA appraisal is done, that appriasal stays with the property until it is sold. For example, buyer 1 applies for an FHA loan and an appraisal is done. The buyer backs out or at some point we find out that he doen't qualify. Now the house is back on the market. Another buyer comes and applies for an FHA loan. This property already has a file and the old appraisal will be pulled. No such thing as getting another opinion as with a conventional appraisal even if you take it to another bank.So beware with an FHA loan, do your homework and make sure the buyer is going to the right mortgageperson/bank. Your AM will appreciate your diligence.
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