All You Need to Know About Using FHA Financing to Purchase a Home in Phoenix Arizona

From Start to Finish, All You Need to Know About Using FHA to Purchase a Home in Phoenix Arizona

Finding The Home

When searching for a home that will be financed through FHA a buyer needs to be aware that not all sellers will accept FHA financing.  Reason being there are a few additional requirements of the seller regarding the condition of the home and seller paid fees.  When a seller accepts a contract with FHA financing they should be aware of the commitment to abide by the regulatory standards of a government secured loan.  These additional requirements come as an added benefit to the buyer by increasing the level of quality the seller will deliver to the buyer in the homes condition.  If a buyer is looking to purchase a major fixer upper or a home sold “as is” needs to discuss at length with his Mortgage Broker and Realtor what will be the best way to structure their loan and strategize the purchase.  Hold-backs and buyer contributions are allowed but limited.

Making an Offer

When making an offer on an FHA loan you want to make sure your offer is in line with a professionally assessed fair market value.  Making an offer over fair market value can hinder the purchase of the home and ultimately cause financing to fall through. Making a higher offer is tempting as a “sweetener” when the buyer is requesting a seller contribution towards closing cost.   The appraiser will make an assessment of the value of the home based on the fair market value and the condition of recent sales of like homes compared to the home being appraised.  In the event the appraised value is below the sales price of the home FHA will not fund the loan leaving hard decisions to be made by both the buyer and the seller as to what to do with this differential. 

Seller's Property Disclosure Statement

The "Seller's Property Disclosure Statement" offers the buyer and their Realtor 1^st opportunity to identify any potential damage to the property that would be of concern to Fannie Mae in the financing of the home such as water damage, wood infesting pest, or an occurrence that has affected the structure of the home. Any repairs as such, it is best if done professionally with receipts.  Documentation of the repair and receipts can be provided to underwriting to show proper remediation of the damage.   When there is water damage and the repair was made, however visually you can still see where the damage happened, the seller should be advised to make the cosmetic repair immediately.  The seller making the repair at this stage of the purchase alleviates the hassle of the Appraiser making a notation of a required repair on the appraisal report that could potentially delay the closing or even worse…prevent closing all together.

Buyer Inspection Notice Seller's Response

When financing with FHA it is important when the buyer is making their request for repairs based on the inspection, appraisal and termite report and any other investigations the buyer has made, to focus on the mechanics and structural repairs.  The sooner any potential red flags that can hinder FHA from securing the loan be found and fixed the better.  You want to make sure the seller repairs any evidence of water intrusion or leaks, exposed electrical or non-working, non- working appliances or potential susceptibility of wood eating pest.   These types of repairs must be made in order to close with FHA financing.

To discuss how your financing options in purchasing a home, FHA vs Conventional down payment assistance programs and how I can will set you up for success in the purchase of your home contact me today, Kalencia Sanders 480-233-3102.