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FHA Loans: Submitting a Written Offer to the Seller

January 31, 2011

Buying a home with an FHA mortgage is very similar to purchasing a home with a conventional loan in many ways. Once the loan application itself has been approved and it’s time to make an offer, buyer and seller interact with one another the same as with any other real estate purchase. First time home buyers with an FHA insured home loan may not know what to expect or what’s expected of them at this stage in the process, but the steps are very simple.

When the buyer decides that a property is the one for them, they may make an offer to the seller. As long as the offer is not submitted in writing as a binding agreement, there’s plenty of room to negotiate but it’s important for FHA borrowers to know that once they commit in writing to specific terms, they have legally bound themselves to those terms.

That’s why it’s very important to read over the entire text of an offer before you sign and submit to make sure it includes specifics that protect both buyer and seller. Those specifics should include the purchase price of the home, any allowable concessions on the FHA mortgage such as the closing costs, conveyances or personal property included in the sale of the home, discount points, and other details. One of the most important details to include in a written offer is that the offer is contingent on a home inspection by a qualified inspector.

The offer should state what areas the seller agrees to fix in the event the inspection uncovers issues with the property, how much the seller agrees to reduce the asking price should the buyer agree to do the repairs instead, and other important details relating to the home inspection and its outcome.

If the buyer and seller agree on the written offer, it becomes a binding contract. It’s not necessarily binding just because the buyer has submitted it, but if the seller agrees to those terms, it does become a contract. That’s one reason why the inspection clause is so important, as well as a clause in the proposal stating how long the seller has to consider the offer before it is no longer binding.

There are other items in the offer the buyer should be sure to include once it becomes a contract, we’ll cover those in another blog post.

Joe Wallace - Staff Writer

By Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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