Concerns with FHA loans

[Anonymous]

....it is in writing that closing costs are prohibited of being paid by the buyer when going FHA........this is how it works..........(if need be I can supply the portion of my contract).

The listing sheets that only realtors see will tell you if they will accept FHA loans..........

You need to find a new realtor!

Message Edited by 1111mel on 02-16-2009 11:31 PM

[Anonymous]

I live in CA, and I'm looking to buy in the valley (Reseda, Woodland hills, Northridge etc). I do have good credit (709 on transunion) and a good job. I am going with FHA becasue of the minimal down payment. Anyway, she did say she did not want to scare me off, but she did and she did sound somewhat dismissive (told me peopel where going to reject my offers when they heard FHA and that I should consider convenional). She asked me about my credit, what I did for a living and my finances. She also promised to send me a listing date base, but never did (but she may have just gotten busy). Anyway, I have not signed any contracts with her, so I would rather shop around for other agents and see what I like. I'm new at this (first time home buyer), so this is all new to me.

However, I did appreciate her honesty, but I was shocked to hear those things about FHA. Hence I posted to get feedback.

[settleordelete]

Awfeag, I'm new to this mortgage/home buying thing too... but I have been educating myself as much as possible through former homebuyers,loan officers and this website before I go out and do something I might regret later. I think what everyone must understand is that there are still crooks (both sellers and lenders) running the system that we depend on.The majority of them are only interested in getting as much out of you as they can. (translation: if you dont wont pay what they feel is fair then they 'll find someone that will). GOODLUCK on your purchase.

[sonogirl]

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@Anonymous wrote:

....it is in writing that closing costs are prohibited of being paid by the buyer when going FHA........this is how it works..........(if need be I can supply the portion of my contract).

The listing sheets that only realtors see will tell you if they will accept FHA loans..........

You need to find a new realtor!

Message Edited by 1111mel on 02-16-2009 11:31 PM

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Am I reading this right?  Sellers have to pay closing costs when their buyers are using FHA? All closing costs or just some specific things? I've read like a 1000 posts on FHA alone and I never knew this.

[Anonymous]

I could be wrong, but I think the poster was tring to say that sellers can not pay the closing costs, only buyers.  In reality I think the confusion is that sellers can not pay any of the DOWN PAYMENT. 

[teton]

I believe a seller can pay up to 6% of the home price (or is it the mortgage amount?) towards buyer closing costs.

[sonogirl]

 

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@Anonymous wrote:
I could be wrong, but I think the poster was tring to say that sellers can not pay the closing costs, only buyers.  In reality I think the confusion is that sellers can not pay any of the DOWN PAYMENT. 

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That's what I thought too maybe it was a typo ,but  if you read mel's first post he/she says buyers are forbidden from paying closing costs and also on the second post clarifying saying again buyers are forbidden.

Also the context of the first post is that sellers have more to pay out of pocket when their buyers use FHA hence the not so warm welcome for buyers using FHA.

[Anonymous]

My Contract reads (which is the standard contract used in the state of Texas)

Under Item 12 "Settlement and Other Expenses" it reads:

Seller shall also pay an amount not to exceed X to be applied in following order: Buyer's expenses which Buyer is prohibited from paying by FHA, VA, Texas Veterans Land Board or other governmental loan programs, and then to other Buyer's Expenses as allowed by the Lender. 

You have to put a required amount down, not a percentage...I learned this from my Realtor.  We took the amount on my GFE and wrote that into the contract.

[sonogirl]

So, is the seller paying closing costs a requirement of FHA or an option? I'm under contract now and I didn't negotiate to have seller pay closing costs will that be a problem for FHA?  

[teton]

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@Anonymous wrote:

My Contract reads (which is the standard contract used in the state of Texas)

Under Item 12 "Settlement and Other Expenses" it reads:

Seller shall also pay an amount not to exceed X to be applied in following order: Buyer's expenses which Buyer is prohibited from paying by FHA, VA, Texas Veterans Land Board or other governmental loan programs, and then to other Buyer's Expenses as allowed by the Lender. 

You have to put a required amount down, not a percentage...I learned this from my Realtor.  We took the amount on my GFE and wrote that into the contract.

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There may be some closing cost items that a buyer isn't allowed to pay, but there are other closing costs that the buyer is typically responsible for. 

 

I found this:

Until Oct. 1, home sellers could essentially contribute an FHA buyer's down payment by making a contribution to a nonprofit, which in turn would provide a down payment grant to the buyer.

While that practice is now prohibited, FHA rules do allow sellers to give up to 6 percent of the home's purchase price for closing costs. "The thing to remember is that they can give up to 6 percent, but if closing costs only total 4 percent, that's as much as a seller can give," says Don Frommeyer, board member of the National Association of Mortgage Brokers. 

Message Edited by teton on 02-17-2009 08:25 PM

Message Edited by teton on 02-17-2009 08:25 PM