FHA Closing Costs
FHA
closing costs guidelines are very complicated and sometimes confusing even
for experienced mortgage professionals.
This page will contain some
of the basic details so you can make sure you are not being taken
advantage of and that the fees being charged to the buyer and/or seller
are correct. Your good faith estimate prepared by the lender will
have it all laid out for you but there are some things you should be aware
of . FHA Maximum Seller Contributions FHA
guidelines allow the seller or other third parties (real estate agents,
builders, etc.) to contribute up to 6% of the sales price toward the
buyers closing cost, discount points, and prepaids. The seller is
also allowed to pay the upfront mortgage insurance premium (MIP). FHA
Financing Concessions:
- Closing costs: does not include non-allowable fees
- Prepaids
- Discount points'
- Up Front Mortgage Insurance Premium (MIP)
- Buy Downs
- First yr advanced payments of home owners association fees and
property taxes. ref: Mortgagee
Letter 97-26 for details.
FHA Sales Concessions:
Sales concessions may also be paid by the seller but their
total value must be deducted from the sales price before computing the
maximum loan amount.
- Buyer broker fees
- Excess rent credit
- Decorating allowances
- Moving expenses
- Personal property such as cars, boats, mowers, furniture,
televisions, etc., given by the seller.
- Real Estate commission on buyers current home
There may be some exceptions based on local customs or on items that
affect value.. Check with your local HUD office.
Financing Closing Costs:
Closing costs may be financed into the loan as long as the max loan
amount is not more than 97.75% of the appraised value and the buyer
contributes a minimum of 3% into the transaction. Note: 97.65% in
Low Closing Cost States. The following costs may be financed into
the loan:
- Credit Report
- Appraisal fee
- Inspection fees
- Origination fee
- Home inspection service fee
- Deposit verification fee
- Title Insurance
- Pest inspection
- Survey
- Recording fees
- Attorney's fee
- Tax Stamps and Mortgage taxes
- Test and certification fees
- Flood Certification
Please check with you local Hud Office for exceptions to this list.
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