The FHA Catch 22

The FHA Catch - 22

One of the problems with FHA loans, other than the fact the sellers tend to shy away from them is the LTV (Loan to value) and appraisal issues.

I have had it happen on a couple of occasions when my first time buyer finds a home well within budget and wants to make an over asking price offer to secure the property. Now these buyers are finding it harder and harder to find a home in a market with a shrinking entry level inventory. So when they finally find a home it does not appraise and of course they cannot make up the difference.

This is especially true when appraisers are being overly conservative and treating our up market as a down market. If there is nothing else on the market that matches it and my client is willing to pay an amount that is not too higher, but higher than they might have had to pay several months ago that should be the market price?

The odd thing is the investor or cash buyer then steps up and pays what is needed. Now we have the comp we needed, but it is too late for the poor FHA buyer.

Right Now The FHA Buyer is in a real bind. The government keeps making things worse rather than better. Even though it does not apply to FHA HVCC has really effected this market too.

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