FHA Loans

[shopbruin]

I'm up to my eyeballs trying to research FHA loans. Since I am in California, it will be difficult to save up 20% unless I get lucky and find some ridiculously priced foreclosure but that's not happening.

Have you gone through the FHA loan process recently? How painful was it? Were there any holdups? Did the appraisal process kill it for you?

I was reading on RedFin's forums that they were finding sellers were less receptive to buyers with FHA loans. (uh oh.)

We're not looking at anything ridiculous - our price range puts us solely in smaller single family homes or in condos/townhomes. I know some of the new developments we have visited said that they are FHA approved. I'm not even sure if that is a question I should ask of the realtor when I pop into open houses.

Do you have a good book to recommend?

We also are not pre-approved, so any insight on the process would be helpful. Basically all we've done is look around the areas we like, see how much the houses are, what we can get for the money, but we are not completely serious enough to even get close to hiring a realtor to help us out. We don't want to go too far without being sucked in and forced to go forward without being ready.

 

[Darthvoy]

first thing you have to do is find an approved FHA broker (you can look at the FHA site to find one near you). FHA loans take a long time because there is quite a bit more paperwork and everything is verified. They look at everything, and I mean everything in your past financial history.

 

[BoberFett]

FHA isn't that much different than conventional, aside from the different terms. Minimum down is 3.5%, you pay an additional up front mortgage insurance premium.

There's really not too much to freak out about. As for the seller's not taking FHA, right now a seller is happy to sell their home at all. They're generally not going to quibble about your financing as long as you're bringing a pre-approval letter with you.


Edit: As for Darthvoy's point, you can close quickly on an FHA loan. There's nothing inherently slower about FHA. Unless you need to close next week, you shouldn't have any problems with timing.

 

[Pacemaker]

I would say make sure the house doesn't have any issues they look for or that will hold it up. The house I bought had chipped paint on a couple of the windows and they had to be repainted before the loan would go through because, "it could be lead paint."

 

[TheoPetro]

Originally posted by: Pacemaker
I would say make sure the house doesn't have any issues they look for or that will hold it up. The house I bought had chipped paint on a couple of the windows and they had to be repainted before the loan would go through because, "it could be lead paint."

thats what is currently holding us up. Im dealing with HUD too though (there the seller) so its a double pain in the ass. Between the 2 of them there is a sick amount of red tape and bullshit.

 

[BoberFett]

Your problem then is HUD, not FHA. Big difference.

 

[nakedfrog]

You don't really need to hire a realtor to buy a house. I would probably start with the pre-approval process so you know how much house you can buy and look accordingly.

 

[shopbruin]

I want to hire the realtor eventually to help us find properties we can't get into because they never hold open houses. Unless I magically find new construction that I love and can afford.

 

[amdskip]

Why do you need to hire a realtor? See a place forsale, call the number, walk through the place. Cut the fat out where you can.

 

[nakedfrog]

Originally posted by: freesia39
I want to hire the realtor eventually to help us find properties we can't get into because they never hold open houses. Unless I magically find new construction that I love and can afford.

If they want to sell their house, their realtor will usually be happy to set up a showing--that's what they get paid for

 

[alkemyst]

my company lends in California. If you want to inquire call 800-232-0351 and speak to our receptionist. Our hours are 9-5 EST, but the account manager for California will work more suitable hours for you. PM for more details.

FHA is no different than any other program. There are simply guidelines the lender must follow. The problem is many of the brokers that came on board in the last 3-4 years don't have a lot of product knowledge.

You can get by with 3.5% or so down and into a home. Sellers are avoiding FHA loans (probably not so much now...if so I am not seeing that in our business) usually only because they are passing on costs or defects that FHA would reject. Also fewer borrowers will qualify as it's a realistic loan program and not like the type GMAC and others were promoting in the past and why they are no longer in business. You need to prove income, you need to have a decent credit history...you need to basically prove you can and will repay. In the past few years giving a loan to someone that has shown they simply do not pay their debts wasn't even questioned you simply stuck them in a program where nothing got verified. Brokers got us into a big mess...they aren't the only ones to blame, but they sucked up all the business larger lenders said "NO" to. We would hear from some customers how come we can't do the deal when Joe'z Loans N Baitshop could do it just fine.

Don't mistake FHA loans taking long with the general market we are in right now...staffs are down and refi's are going crazy. As far as all the red tape that's usually transparent to the borrower and seller. The loan company should be handling all these hurdles.

 

[alkemyst]

Originally posted by: nakedfrog

Originally posted by: freesia39
I want to hire the realtor eventually to help us find properties we can't get into because they never hold open houses. Unless I magically find new construction that I love and can afford.

If they want to sell their house, their realtor will usually be happy to set up a showing--that's what they get paid for

an open house is really more about a realtor soliciting business from those there on other properties. I don't know of many open houses that someone was looking to sign that day, but I always see the guy handing out cards to show them something 'a little bigger', 'a little closer to the schools', 'a little less expensive', etc.

 

[Gunslinger08]

I got an FHA loan last July. I put down 2.25% (instead of the normal 3%) because I paid my own closing costs. I didn't have any issues, but I did buy a new house. If you're competing with other non-FHA loans, you're probably going to lose though, especially if the home is older and needs any work. People generally frown on dealing with FHA loans, even though the appraisal process isn't that bad.

 

[Aimster]

I want to apply for an FHA loan so I can use the remainder of my money for "emergencies"

I have 20-30% down. I rather put 3.5% down and keep the rest in savings + get 8k from the govt.

I can do that right? I mean FHA is not for 'poor' people is it?

 

[arkcom]

You guys realize having a Realtor wont cost you anything right? The seller pays all the commission, and it's the same weather you bring your own Realtor, or use theirs (the sellers agent does not represent you, or your best interests).

 

[nakedfrog]

Originally posted by: alkemyst

Originally posted by: nakedfrog

Originally posted by: freesia39
I want to hire the realtor eventually to help us find properties we can't get into because they never hold open houses. Unless I magically find new construction that I love and can afford.

If they want to sell their house, their realtor will usually be happy to set up a showing--that's what they get paid for

an open house is really more about a realtor soliciting business from those there on other properties. I don't know of many open houses that someone was looking to sign that day, but I always see the guy handing out cards to show them something 'a little bigger', 'a little closer to the schools', 'a little less expensive', etc.

I didn't attend any open houses when I was looking, I just used online search engines and told the realtor which ones I wanted to check out, then scheduled a time.

 

[alkemyst]

Originally posted by: arkcom
You guys realize having a Realtor wont cost you anything right? The seller pays all the commission, and it's the same weather you bring your own Realtor, or use theirs (the sellers agent does not represent you, or your best interests).

Have you really thought your idea out?

 

[alkemyst]

Originally posted by: Aimster
I want to apply for an FHA loan so I can use the remainder of my money for "emergencies"

I have 20-30% down. I rather put 3.5% down and keep the rest in savings + get 8k from the govt.

I can do that right? I mean FHA is not for 'poor' people is it?

FHA has rules http://www.fhainfo.com/index.asp

poor is really subjective, but that $8000 is income limited. The property value is capped on an FHA. However there are no income limits for FHA nor credit scoring ones (although credit does matter).

I don't really see people not wanting FHA anymore, in the past it was due to value limits...now most properties are 'right-priced' and will fail under FHA guidelines.

 

[alkemyst]

Originally posted by: nakedfrog
I didn't attend any open houses when I was looking, I just used online search engines and told the realtor which ones I wanted to check out, then scheduled a time.

I found open-houses to be pointless. It does nothing but drum up new business for the realtor and create a frenzy in the buyers should two be there and ready to buy. However; like your example I have never known a serious buyer to attend one of these (save for a total new construction)...most just come out to tire-kick and get free donuts and then play the part of a tycoon.

Nothing like seeing some fatty in all Walmart with a fake Channel purse whining about the fixtures in the bathroom not being gold and the finish anything but real marble.

 

[Codewiz]

My wife and I purchased our house with an FHA loan. The biggest issue is property value caps. But with the market the way it is, it shouldn't be an issue. When I purchased in 2004, we were able to buy into a upper middle class neighborhood well below the caps set.

The FHA process was not bad for us. We had all our finances. We had our 3% downpayment. We had all our ducks in a row. We just handed the information over to our bank and in 30 days, after our offer was accepted, we purchased the house.

You first should get pre-approved. That will eliminate 99% of problems that a seller might have. The appraisal shouldn't be in issue if you have a good real estate agent because he/she should be able to recommend an appraiser that will play ball. My house appraised at the exact amount we were buying it.

Your biggest issue will be finding a good bank to do your loan. I recommend credit unions in general because they are typically more helpful in general.

 

[alkemyst]

Originally posted by: Codewiz
The appraisal shouldn't be in issue if you have a good real estate agent because he/she should be able to recommend an appraiser that will play ball. My house appraised at the exact amount we were buying it.

Doesn't work so easy today and definitely the agent is under no control of the appraiser for the loan.

This is part of the reason approved appraisers are required now.

 

[Codewiz]

Originally posted by: alkemyst

Originally posted by: Codewiz
The appraisal shouldn't be in issue if you have a good real estate agent because he/she should be able to recommend an appraiser that will play ball. My house appraised at the exact amount we were buying it.

Doesn't work so easy today and definitely the agent is under no control of the appraiser for the loan.

This is part of the reason approved appraisers are required now.

Not sure where you live but it is still the good ole boy system here. People play ball if you talk to the right people.

Now if you are talking about foreclosure city in CA, then yeah that will be a different story.....

 

[BoberFett]

Originally posted by: alkemyst

Originally posted by: arkcom
You guys realize having a Realtor wont cost you anything right? The seller pays all the commission, and it's the same weather you bring your own Realtor, or use theirs (the sellers agent does not represent you, or your best interests).

Have you really thought your idea out?

Have you?

 

[JS80]

Is there an income cap on FHA loans and is there a loan max?

 

[DT4K]

We did an FHA loan in 2002 and didn't have any problems. It was new construction, so I'm not sure if that makes a difference.
My understanding of why some sellers may not want to deal with FHA was that there were some additional requirements for the house and there were certain closing costs that the seller would be required to pay. I'm not sure of the details though.
In our case, we got a much better rate with an FHA loan because the credit requirements were more flexible. Our credit score was low, but the negatives on our credit were all several years old. We were told that the FHA underwriters pay a lot more attention to the most recent 2 years of credit history and are more accepting of credit issues, if it looks like they are well in the past.