Financing in Green Bay>Question Details

Kujo20, Home Seller in Green Bay, WI

Purchase agreement states conventional loan noe buyer wants FHA loan

Asked by Kujo20, Green Bay, WI Sun Dec 20, 2009

I am sellig my home and my signed purchase agreement states a financing contigency for a conventional 30 year mortgage not to exceed 6% interest. 12 days after signing the agreement the buyers agent sent be a FHA ammendatory clase and tod me to sign it. No where in the purchase agreement does it mention an FHA loan. I m worried if I sign it I will be forced to pay more at closing and be out the earnbt money if the appraisal comes in low. Does this happen often?

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Isabel Elsesser’s answer
I don't think you need to worry. 95 % of today's buyers obtain FHA mortgages. Closing costs will not vary much.
Appraisal should be fine if other homes have sold the same or above your contract price.

Isabel Elsesser, Realtor
1 vote Thank Flag Link Sun Dec 20, 2009
A high percentage of the country is in a declining market which causes appraisals to come in low.

I have seen it in NY and NJ plenty of times.

You are correct that you (as the seller ) will not be protected if the appraisal comes in low.

As a precaution, you can ask your Realtor to make sure there are supportive comps for the sales price of your home, but it is not always a guarantee that an appraiser would accept them. There are many reasons why an appraiser will use some comps over others.

Having said that, there won't be any extra costs to you if the buyer gets an FHA loan. The buyer might also have an easier time obtaining an FHA loan because of various factors related to their income, assets and credit.

What you could do is delay signing the ammendatory clause until after the appraisal is done. Most lenders don't require it in order to start the loan. They could even issue a committment to the buyer and condition that the ammendatory be signed sometime before closing.

This way, by contract, the buyer might still tied to obtaining conventional financing.

Please run this idea by your attorney.

Hope this was helpful.

Good luck.
1 vote Thank Flag Link Sun Dec 20, 2009
Al Akerman has given you a very good response! I agree.
1 vote Thank Flag Link Sun Dec 20, 2009
FHA loans do not have and additional closing costs for sellers than conventional loans. Also, FHA loan appraisals are no more conservative than conventional appraisals. The same appraisers that do conventional loans many times do FHA appraisals as well.

In my opinion there is way too much misinformation out there about FHA and VA loans. Many times they are easier to close than conventional loans.
0 votes Thank Flag Link Mon Dec 21, 2009
Thank you for the compliment Eric.
0 votes Thank Flag Link Sun Dec 20, 2009
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