Are sellers’ concerns guaranteed about FHA loans? it depends.
The number of FHA loans that have been successfully closed in 90 days is comparable to other loan types. According to August 2021 data from the Origination Insight Report with ICE Mortgage Technology, approximately 74% of all FHA loans were successfully closed within 90 days. In comparison, about 79% of all traditional loans were successfully closed within 90 days. That’s just a 5% difference.
What if the seller does not accept an FHA loan?
Whatever their reasoning is, sellers are not legally required to accept loans they don’t like. While it may be possible to understand where they come from and work with them to find a comfortable agreement for everyone, there are other strategies to try if they meet a seller who refuses an FHA loan.
Find out why sellers don’t accept FHA loans
You can find a lot by asking “Why?” The seller may give you a simple answer. If you have reasonable concerns, you may be able to find a solution.
To alleviate your economic concerns, try to sweeten your deal by applying one of these strategies and showing it to a financially stable seller.
Be careful if the seller does not provide a valid reason or refuses to provide an answer at all. They may be trying to hide the defects in the house.
Take precautions
If you still want to move forward with your purchase, or if your seller is flexible, take the necessary precautions and make sure you make a sound investment. This includes conducting home research, reading property disclosures with a critical eye, and requiring a thorough home inspection by a highly rated professional inspector in addition to an FHA evaluation.
When I walk around the house, I do a detailed inspection of every corner, corner, and ranny. Look for defects such as exposed wires, cracks in the wall, signs of underground water (wall stains, mold and drainage, etc.), and other issues that will cause your home to fail.
I offer to pay the repair fee
If the seller is worried that the home has not met the HUD guidelines and does not want to pay for repairs, they can offer to pay for repairs discovered during the evaluation. With an offer to pay at the table, the seller does not need to make any modifications before handing over the key. Also, repairs are your responsibility before closing the house.
Consider a traditional loan instead
If you are eligible, opt for a traditional loan instead. Traditional loans can cause lower payments to fall, but all under 20% will need to pay private mortgage insurance (PMI). To qualify for a traditional loan, you need a credit score of 620 or higher and a debt return (DTI) of 50% or less. If your credit score is not where you need it, you may be able to recruit co-signers for your mortgage.
I will withdraw your offer
If you and the seller don’t upset you, it may be time to withdraw your offer, leave your home and resume your search. It can be frustrating, but it can save you stress, time and money. You may find a home that you like more with another loan type that will eventually unlock the door to homeownership.
Talk to a mortgage expert
However, even if you choose to go through the home buying process, you will still need to work with a lender who will stay with you at every stage of the day. Chat with a mortgage expert before deciding on your next step. You can answer your questions and see the available options. You should also consult with your real estate agent about transaction complications.
Conclusion
If an FHA loan is perfect for you, don’t sacrifice a proper mortgage for a property that may not be worth it. While some sellers are not fans of FHA loans, many are happy to accept FHA mortgages.
Whether you decide on an FHA or traditional loan, we recommend that you are ready to make an offer at home without delay. Get ready with RocketMortgage® and start the mortgage approval process now.
