Many sellers prefer conventional financing or any financing over FHA loans. A seller has the right to refuse any offer, including FHA offers. Sellers refuse offers for a variety of reasons including:.
Look at hard money lenders for your financing needs. Despite the name and the reputation they have , hard money loans are a great way to start investing in real estate.
Hard money loans have a variety of benefits including:. Even so, FHA mortgages are a great deal for cash-strapped borrowers looking to become homeowners. With mortgage rates still far below their historical norms and home prices still quite affordable, it's an attractive time to buy.
But if you can somehow manage the down payment on a conventional loan, you might want to consider that route rather than trying to scrimp up front by going the FHA route. No spam. We take your privacy seriously. Follow us on Twitter and Facebook. Written by David Mully Read Time: 2 minutes. Tight market favors sellers Consider this: existing homes sold in June had been on the market for a median of only 37 days, according to the National Association of Realtors.
Sellers will have to make the repairs necessary to meet these minimum standards before the sale can close. This can scare some sellers away from FHA buyers, especially when they have more than one offer on their residences. Some sellers believe, too, that borrowers who are taking out FHA loans do not have strong credit.
They worry that FHA buyers are less likely to get approved for their mortgage loans, scuttling their home sale and wasting their time, Yates said.
He said it all comes down to the perceptions that sellers have regarding FHA loans. This can be a more serious challenge in competitive markets where homes are more likely to generate multiple offers, Roeder said. In these markets, sellers might shy away from FHA buyers and choose instead to accept offers from buyers with conventional loans.
No spam. We take your privacy seriously. Follow us on Twitter and Facebook. Will an FHA loan hurt your chances with home sellers? Written by Kirk Haverkamp Read Time: 5 minutes. All of these factors make FHA loans an ideal choice for first-time homebuyers. While they do offer borrowers more flexibility, they often have higher interest rates than their conventional counterparts. Most FHA loans also require borrowers to purchase mortgage insurance.
There are two major reasons why sellers might not want to accept offers from buyers with FHA loans. Both reasons have to do with the strict guidelines imposed because FHA loans are government-insured loans. For one, if the home is appraised for less than the agreed-upon price, the seller must reduce the selling price to match the appraised price, or the deal will fall through. With a conventional loan, if the appraised value is less than the agreed-upon price, the buyer has an opportunity to negotiate the price or come up with the difference.
That means the seller may still be able to sell at the agreed-upon price or a price close to it. With FHA loans, their hands are tied — they either lower the price or list the home again. If they do decide to list the home again, the appraisal stays with the property for days.
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