One of the largest hurdles to individuals investing in homes is the inability to come up with the down payment. For this reason, HOAs need to consider the value of having FHA recertification on their buildings. For buildings that are having trouble selling their units, having FHA approval could greatly improve their prospective buyer pool. If your association is considering whether obtaining FHA approval is the ideal fit for your organization, review the information below:
Reasons Why FHA Recertification Is Worthwhile
What Is FHA & Why Does it Matter?
Federal housing administration a program instigated by the federal government that enables individuals with a lower down payment to be able to purchase property provided they have a monthly mortgage insurance fee tacked on to their monthly mortgage payment. Depending on which part of the country your community is located, there will be limits to the amount of money a prospective resident will be able to obtain for their FHA mortgage. If your community can obtain FHA approval, you will be able to fill more units since more applicants will be able to afford the down payment.
How Long Does It Take to Obtain FHA Approval?
Assuming that there are no delays in additional documentation, it can take up to thirty days for an application to be approved. If your association’s FHA approval is about to expire, it is important to ensure that your community is positioned to apply once again.
If you can gather all required documentation early, it will assist you in having little time between the expiration of your prior approval and the start of your new period of approval. For communities that are proactive about this, they will be able to attract more residents as quickly as possible.
Why Keeping FHA Approval Current Is Important
Keeping FHA approval is something that will be valuable to your HOA. Mainly, you will be able to secure more residents that can pay your HOA dues. If your HOA is looking to increase the resident fees it has come in, then investing in FHA approval will be an incredible value to your organization.
Why Waiting Is Not Recommended
For communities that have had federal housing administration approval previously, there is an opportunity to renew within six months of expiration without substantial additional requirements. If your community waits longer, it will have to start the process from scratch again.
One of the worst outcomes that can happen to an HOA is when a qualified buyer has mortgage approval in hand and the community does not have current FHA approval due to avoiding the reapproval process before the six-month expiration date. Your HOA should strive to be proactive rather than reactive.
Ideally, it is best to set aside funds within your HOA budget in anticipation of the expiration of your federal housing administration approval. This way, you will be able to provide housing to qualified buyers that have mortgages approvals and would like to reside within your community.
Why FHA Approval Is Important to Consider Carefully
Even though this has many benefits to your community, it is also costly to apply and go through the application process. Your HOA has to weigh whether the cost is worth the projected benefits that your community will experience as a result of FHA approval.
The more that your HOA can research about this and seek outside advice, the better off your HOA will be in the long run when deciding as to whether renewing FHA approval is the ideal fit for your community’s current needs.
The Benefits of Raising Awareness About Your Community’s FHA Approval
Many individuals that are looking to make a lower down payment on a home or condominium are not able to find information easily about which communities do have FHA approval. For this reason, HOAs need to make their FHA status known to local realtors that may be able to show properties within their communities to prospective buyers.
Realtors will have the motivation to show your communities to their buyers that may not have the required finances to make a 20% down payment that is required by conventional mortgages to still be able to make their commissions off of those buyers rather than turning them away. Failure to raise awareness about your community’s FHA approval could cost you a lot of potential buyers that would have increased the amount of capital your HOA is collecting for dues each month.
FHA Mortgage Approvals Are Separate from FHA Community Approvals
Many HOA boards are unaware of the difference between FHA mortgages and the processes communities have to undergo to receive FHA approval. The mortgages have strict requirements about who is eligible to apply to them; however, those mortgage requirements are entirely separate from the process that communities need to undergo to obtain FHA approval so that buyers who are approved for FHA mortgages can legally live in their communities.
HOAs are advised to consider carefully the entire process of being in adherence to FHA requirements and what the potential cost would be to have external advice regarding how to comply with FHA regulations to attract more potential buyers to the units within their communities.