In preparing to sell your home, there are lots of considerations to think about. Who will sell your house, do you sell it yourself or do you hire a professional? Then comes the work of doing whatever is needed to get the house ready to take pictures and show. Planning the staging the advertising and the excitement of finding a buyer that loves your house enough to make you an offer!
Hopefully, you have taken into consideration everything you can think of to make the sale to smooth. Let’s take a step back and talk about an area of the sale that is sometimes skimmed over as not important in the beginning. Depending upon the price of your home, it will attract different buyers with different loan options. A cash deal would be the pinnacle and what every seller dreams. What about the other 75% of us that needs to go to the bank?
If your home is within certain lender guidelines such as the price and condition it could either go with a conventional or FHA. I am not going to go into the different qualifications for each loan. If you are in good standing financially and have great credit scores, you will probably go with a conventional type of loan. This type of loan is more forgiving when it comes to underwriting. FHA, on the other hand, can be sticklers for condition and underwriting guidelines.
First time home buyers are most likely going to go for the FHA loan that has more protections for the buyer and can allow asking for closing costs from the seller and getting a down payment gifted by some nice relatives or great best friends.
Purchasing as a first-time buyer you probably have saved and worked hard to delve into the home ownership club. If you are searching for your first property you will need to look at homes that are in move in and livable ready. As a buyer with an FHA loan, you will not be searching for fixer-uppers thinking this will save money. The fixers are not allowed on FHA loans. Leave those for the cash buyers.
As a home seller accepting an offer from an FHA purchaser, your house will need to have different thinking. Here are some thoughts:
1) Your house will need an FHA inspection; this means it will be picky and very complete.
2) Your house will need an FHA appraisal, that can be sticklers for underwriters.
3) FHA buyers will in most cases ask the seller to pay up to 3% of the closing costs.
4) Closing time may take up to 45 days.
When selling and accepting an FHA understand that the home needs to be in very good condition and needs to be up to code in most cases. This means that a resale home that maybe 20 to 30 years old could cost the seller some additional money to make repairs that the underwriters decide would be a problem for their lender.
When placing your home on the market with your Realtor, make sure you cover the type of loans you will accept. If your home will not meet FHA guidelines then make sure the buyers know this fact.