FHA Offers Looking Weak - Express Loan Approval?

[Art Maydan]

I just put in an above list price offer on a 2-flat with an FHA pre-approval and they took another offer. I suspect this is going to keep happening when inventory is so low and buyers can choose someone whose financing looks stronger.

My lender told me about express loan approval. He says that it makes the offer look stronger - almost on the level of a cash offer.

My lender says:

"Under this program your loan will be underwritten (financially) right now with the address as TBD. This will allow your realtor to put in an offer without financial contingency, which makes your offer a much stronger offer and exponentially increases your chances of getting your offer accepted.

The only contingency on the offer would be: Purchase contract, Clean title, Appraisal, Flood cert"

The only cost is $200 which gets credited back at closing.

Has anyone heard of this before? Is it a good move to make my offers look stronger? I was considering going from FHA to 5% down conventional when my lender recommended this instead.

[Paul Defngin]

@Art Maydan, if you are a first time home buyer you can go conventional with just 3% as @Julia Dugger mentioned. There are some restriction related to median income in your county and whether the property is in a certain census tract. 

That said, I don't believe that FHA necessarily make your financing less attractive. It seems to me that there are some issues here that you have control over. #1 is your lender. If he has done his job, he should be reaching out to the listing agent to reassure them that he has reviewed all your necessary documents, actually pull your credit and pre-approve you. If his underwriter review it, then even better. #2 agents who thinks that FHA is somehow a problem probably just need to educated. Unless your are looking at properties that are REOs as @Julia Dugger mentioned above, or are have serious issues that are deem a risk to your safety and health; there really is not much difference between FHA and conventional.

As far as that LO asking you to pay a fee to get preapproved as a TBD-I  would follow what everyone says already-go to a differerent lender. We do that for free.I wonder what CFPB would think of that LO. Jeez

By the way I have ethical and professional lender friends in IL if you need referrals.  I hope you and your wife gets into your new home. Good luck.