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Does your home stack up against the mortgage approval process?

In the world of real estate, we hear so much talk about buyers being pre-qualified or pre-approved when buying a home. Those selling their home might want to get their house pre-qualified so you know that it fits basic mortgage standards.

After being in the mortgage business of 19 + years, you will hear many stories of why a house didn’t sell. Since the mortgage arena has been much more difficult over the years, there have been times when the settlement didn’t occur because the house itself did not fit proper requirements. A good example is that of FHA mortgages compared to conventional loans, that FHA loans are much harder on the property. Not necessarily, but it does come down to the type of property, zoning, and much more.

Just recently I heard from a buyer who was qualified with an FHA loan. The key point in this conversation was that, “everything was going smoothly until ….” Until the loan was being processed after the appraisal was done. The property was a duplex and the one unit didn’t have a full operating kitchen. This could kill the deal under FHA.
What I wanted to bring up is that some of these issues can be addressed prior to a buyer accepting an offer. Not everyone can remember every detail when it comes to what is allowed and not allowed, no matter what type of financing the buyer is obtaining. Let’s take a look :

[message type=”warning”]Get an Appraisal done when Listing a New Home.[/message]

Why can this be such a great idea?

You could get a true expert that would know many of the lending guidelines when it comes to appraisals. If one would suggest an appraisal, I would make sure that appraiser is approved to do FHA appraisals also. And have this person view the home from all angles. Some of you might think about just hiring a home inspector. My advice would be to hire an appraiser.

The second idea would be to list the issues regarding the home being sold and not hide them from prospective buyers. Hey, I have heard many types of stories. My main point would be if you know about it, make it known to everyone.

Lastly, get your loan officer involved with the issues. Have them run it by their underwriter. I would suggest all things that aren’t ordinary within the surrounding area or the property. If the listening agent was aggressive in doing this, it could solve any problems that would come up at a later time.

Now, let’s step away from this and view it from the seller’s side of things. I know many will harp because it would be another cost to the seller when trying to sell their home. Maybe $375 to $500. How could a realtor explain this cost to the seller?

  • The listing agent can sell it as the cost of selling the home.
  • Split the cost with the seller when trying to win that listing or pay for yourself.
  • Have the buyer pay for the cost within the sales price.

Reminder : Throwing caution to the wind. Some of you will think or sell the idea that the appraisal could be used by the new buyer. I would not recommend this at all. To many new appraisal rules on how appraisal should be ordered and or the time period in which an appraisal is good.

Summary : The ending result, how about being pro active. As the realtor, market yourself as the problem solver prior to unexpected problems, and not just keeping the fingers crossed. If you get resistance from the seller, just share this article, because it does happen.

Times have changed. Be ahead of those changes before you find out the hard way. It’s easy to criticize after the fact, asking why certain loans are tougher on certain issues. This is another reason why FHA loans sometimes get a bad name. Here is my opinion and a tip, something to keep in mind. Don’t assume what the better loan for the buyer would be. I have had realtors sell against other loans that could end up making it more expensive for the buyer. Just leave this up to a good qualified loan officer.

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