Are you FHA-Approved????

That's an important question all condo, townhome, and villa owners should be asking.

Why? Great question.

The government has a program run through the Federal Housing Administration that will allow qualified borrowers access to mortgages of UP TO 96.5% of the home's value (notice I did not say contract price, as an FHA appraisal will supercede a contract price). The borrower has to come up with the other 3.5% down payment, as well as closing costs. Closing costs can be paid by the seller on behalf of the buyers.

This is a terrific program that gets buyers with meager savings and blemished (but not sub-prime) credit into homes. Think first-time homebuyers, newlyweds, single parents, lower-income, etc. Truly a great program that encourages home ownership among a class that doesn't qualify for conventional loans.

Ok, so that's FHA in a nutshell. How does that help you, the condo/TH/villa owner? Well, since the 100% loans have gone the way of the dodo bird (non-existent) it is one of the most popular loan programs in the market today, aside from VA loans. This means more and more buyers are qualifying under this program. THE FLY IN THE OINTMENT IS THAT THE COMPLEX HAS TO BE APPROVED BY THE FHA FOR FHA LOANS.

It's an involved process with forms, documentation, and some elbow grease. Some complexs, due to their restrictions, will never qualify. However, it's well worth it for enterprising residents to ensure they have explored getting approved for FHA loans.

How can you tell if you're already approved? Luckily, FHA has a continuously updated website to check. It's: https://entp.hud.gov/idapp/html/condlook.cfm

Most likely your complex will not be approved, but it's normally for lack of trying. Once approved, it's something you want to SCREAM from the rooftops and let all buyers know. Ask you Association if they have ever tried to get approval. If they have not, volunteer to be a liaison and get them approved. Visit HUD.gov for more info.

FHA is a gift to buyers AND SELLERS so do your best to take advantage of it today.

With the increasing costs of basic necessities such as food and health care, as well as car insurance, fuel, clothing, etc. it is not uncommon for Home Buyers to need financial assistance with the closing costs when purchasing a home. Let's face it - not everyone who can afford a home's monthly payment has $7000 - $8000 for closing costs IN ADDITION to the home's down payment.

To go back a step, closing costs are IN ADDITION to the purchase price and include the following, among other items:

1. Mortgage fees
2. Insurance pre-pays
3. Property tax pre-pays
4. Closing fees
5. Lenders Title Insur
6. County & State recording fees
7. Title endorsements

More often than not, closing costs for a home around $250,000 will be appr. $7500. Savvy Buyers (and their realtors) know that in this market, Sellers are willing to bend over backwards to ensure their home gets sold. Somethimes that includes making Seller concessions to pay all or part of the Buyers closing costs.

If the Buyer is getting an FHA loan, the MAX seller's can "contribute" towards the buyer's closing costs and prepaid items is 6%. Purchase prices can be bumped up to allow make the seller feel less "pain" but all too often appraisals come in lower than expected, which brings everyone back to the negotiating table.

If you are getting a conventional loan, many lenders cap the closing cost assistance to 3%, a significant difference. Most of the time, however, buyers getting conventional loans have ample money for downpayment and their closing costs.

For the Seller, I have heard of some instances where Seller Concessions are tax-deductible. You'll want to check with your tax advisor to see if that applies to you. Helping pay a Buyer's closing costs, whether in full or partially, is a win-win for all parties and is becoming a much more common occurence.

If your a seller, don't automatically shun these offers...they may be EXACTLY what you need.