When reviewing offers on a home that is for sale there are many things for a seller to consider – is the buyer really qualified, what is the offer price, what are the terms, is the offer something that is really workable.
Let’s talk about the buyers’ financing. Of course, the best is always “All Cash” because it not only takes away the appraisal issue but perhaps the need for repairs. Any type of loan a buyer can obtain use has pros and cons. Qualifications and requirements for loans are constantly changing.
In a nutshell there are conventional loans which usually require the buyer to have a 20% down payment to avoid mortgage insurance. There are also loan products that require 10% down with 10% as a silent second. FHA loans require the buyer to have 3.5% down payment and closing costs. A VA loan may not require the veteran to put down any money but to have their closing costs. In considering what type of loan a buyer is attempting to obtain the lender should also be considered. The listing agent should be able to provide some information to the seller regarding a lender’s reputation.
Regardless of whatever loan product a buyer chooses the seller is not guaranteed the home will close. It really doesn’t matter how much money a buyer is using for a down payment the seller won’t know if the home is actually sold until financing contingencies are removed.
It doesn’t matter if you are a buyer or seller, be sure to discuss financing with your agent and how it may affect the over perception of the strength of an offer.