Homes are selling quickly this spring. As reported by CNBC home sales in March 2017 were up 9 percent compared to March 2016, in spite of the fact that inventory was down. Properties went under contract in 49 days on average, a large decrease from the 60 days seen a year earlier. As the market heats up it’s not uncommon to hear of competitively priced homes receiving multiple offers and going under contract in two to three days.
This fast paced activity means buyers need to sell themselves to home sellers as much as sellers need to market their homes. House hunters are likely to find competition when they decide on a property they’d like to purchase. In this scenario it’s extremely important to put forth a strong offer, and to differentiate in a positive way from other hopeful home buyers.
Financing of course plays a large role in the strength of an offer. Here are some ways your clients can leverage an FHA mortgage in their favor when the market is tight:
Low Down Payment
One of the biggest advantages of an FHA loan is the low down payment requirement. By putting down as little as 3.5% buyers don’t need to deplete their savings to come up with a large down payment. This frees up funds for other expenses such as reserves and closing costs. In a competitive market sellers may be reluctant to offer to pay any portion of the closing costs, and buyers who don’t ask for this may be more likely to have their offers accepted.
FHA loans can be easier to qualify for when compared to some other mortgage products. It’s not necessary to have perfect credit or a sky high income to be eligible for FHA financing. Because of this, sellers are likely to feel confident in a pre-approval letter stating the buyer will be obtaining an FHA mortgage, and not be overly concerned that the deal could fall apart due to financing issues.
Ideal for Fixer Uppers
In a tight market it can be tough to find a home that has all the criteria on a buyer’s wish list. Opening up the search to include properties in need of repairs or that could be updated or renovated to include all the must have items could make all the difference. An FHA 203k mortgage can cover both the purchase and the cost of the work on the home, making it feasible for someone without lots of cash on hand.
Explore our full suite of FHA loans at afrwholesale.com.
Photography by [Mykola Komarovskyy] © shutterstock.com
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Tags: FHA Mortgage