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This quiz was originally published on Discover Columbus last fall, a WOSU story about home buying brought the quiz and a buyers quiz to mind: 

Buyers Beware -  WOSU cautions buyers that lenders may require six months of mortgage payments up front…   Reserves?

Central Ohio home sellers here’s a quiz on FHA financing and what it means to you as a seller.  True or False

1. FHA requires “Electrical Ground Fault Interrupters (GFI)” circuits to be installed when a plug / outlet is within 6 feet of a water outlet.

True
False

2. FHA requires handrails where there are three steps or more.
True
False

3. FHA requires a termite inspection on a home.

True
False

4. FHA requires an electrical certification on a home.

True
False

5. FHA requires a roof certification on a home.

True
False

6. FHA requires a furnace certification on older homes with gravity feed or steam (registers) heat furnaces.

True
False

7. FHA requires the seller to pay for the underwriting, commitment and processing fees for the buyers loan.

True
False

8. FHA appraisal are more likely to under-appraise than a conventional mortgage loan because the appraiser has a different set of requirements.

True
False

9. FHA loans allow for carpeting and /or decorating allowances in a purchase agreement.

True
False

10. FHA requires chipping paint to be scraped and repainted on homes built after 1978.

True
False

Tabulate your answers…
and scroll down to see the correct answers for FHA financing today… in 2007
 

The answers to all the questions is “False.”

The seller does not have to worry about certifying roofs, the electrical system, the structural system (except on manufactured housing) Or a heating system. There is not a requirement for GFI outlets to be installed. There is not a requirement that the house be tested for termites or other wood destroying insects (the purchase contract may require a termite exam but FHA does not. It is negotiated in the contract with the buyer.)

That is not to say that if the roof is leaking you don’t have to disclose it. Or that if there are signs of a defect in the roof for example that the appraiser is not going to ask for a roof certification. If there is a stain on a ceiling the appraiser could ask for the roof to be certified but not all roofs, electrical systems, structural systems, furnaces, etc. have to be certified.

In the old days a house was considered guilty until proven innocent by FHA certifications to the contrary. Not anymore.

Homes built prior to 1978 the appraiser may require chipping paint to be scraped and repainted because of lead paint.

The seller no longer pays for any charges for the buyers loan other than the tax service fee ($80.)

The questions and answers were part of a quiz for a continuing education class taught by Susan McKnight, the branch manager for Real Living Mortgage in Columbus.  There’s contact info on my website for June Zepp of Real Living Mortgage as well as other lenders who do FHA financing  on MaureenMcCabe.com mortgage page

The FHA buyers quiz dealt with reserves. Money a buyer has to have on hand for conventional financing.  Where did all the buyers go?  What happened to financing?  Watch Dan Green’s video that shows graphically what has  happened…

Foreclosure Crisis - What Happened the Movie

WOSU cautioned Central Ohio home buyers they would need six months of mortgage payments “upfront.”   Reserves?

Buyers Beware

Central Ohio home buyers here’s a True or Falso quiz on FHA financing. This quiz and a quiz for sellers was originally posted on Discover Columbus last fall… there is a question in the quiz about cash reserves.

1. FHA inspects the home for the buyer.

True
False

2. A house that has been owned by the seller less than 90 days is eligible for FHA financing.

True
False

3. FHA financing is only for single family homes and can not be used to buy a 2, 3 or 4 unit home.
True
False

4. FHA financing can not be used to buy a HUD or bank owned property.
True
False

5. An FHA buyer is required to have two months of payments left over in their bank account after closing (known as reserves.)
True
False

Check your answers….

Scroll down

While you are scrolling down… FHA financing is available from Real Living Mortgage. The questions and answers were part of a continuing education class taught by Susan McKnight the branch manager of Real Living Mortgage in Columbus.

The answers to all five questions is false.

For your protection get a home inspection. The appraisal on the property is to protect the lender. An appraisal is about value, not about condition. You can not use FHA financing to buy a house that was flipped (90 days.) You can use FHA financing to buy a multi-family up to 4 units as long as you live in one of the units. You can use FHA financing to buy a bank owned property (a repo, a HUD house.) FHA does not require the buyer to have reserves of cash.
 

WOSU writes: Potential Homeowners Look For Deals AP article, Columbus Board of Realtors press release of January inventory level….

… yet cautions “buyers beware”

“But buyers beware:
Loans are harder to get nowadays, and some lenders will expect at least six months’ worth of payments upfront.”

Upfront? Or are they saying lenders are requiring buyers to have six months reserves? pssst qualified buyers talk to a lender about FHA no six month reserves requirement…