How much total cash for a FHA Loan on a short sale

[mccallb]

Hi all,

I am thinking of getting preapproved next month and I've never bought a house before.  I am trying to figure out what DP i need for an FHA loan on a house that is a court ordered short sale.  The home price is 215,000 but the zestimate is around 205,000.

I've heard there are some FHA specific stipulations regardin short sales and handling closing costs, so my question is, what amount is reasonable to assume I need to have, in cash, to make this happen?

Thanks!

[TeamSNS]

Hello,

Regardless of the type of sale it is, you will need a minimum 3.5% down, which in your case is 7525.00 if the sales price ends up being 215,000.00.  But if the value comes up less than the sales price, and you really want the house still, you would have to put the down plus make up the difference. 

On top of that there are closing costs.  This all depends on what fees are involved with the lender and other 3rd parties services.  Realtors usually tell their buyers its about 3% of the sales price, but IMO I think thats a high estimate.

Hope this helps.

[mccallb]

Ok, so hypothetically if the appraisal for the house comes up at 205,000 and they are selling it for 215,000, and won't budge, that's a 10,000 amount that I would have to pay the difference on?  And that amount would be in cash?

Also, as for the closing costs, you say that 3% is high for closing costs?  It includes the origination fee, appraisal, and all that right? I think at one point, I calculated that out to around 3500 dollars in my area.  Closing costs are incremental costs going to different places right? I could theoretically pay some of that with credit cards?

Thanks for the response!

[TeamSNS]

to the first question, yes you would have to pay the difference in cash.  You can only finance 96.5% of whichever is lower, sales price or value.  

For closing costs, on a recent deal in CA with a sales price of 275k consisted of about 2700.00 in escrow and title fees alone.  From that, you have to add on your insurance premium for the 1st year, lender underwriting and yes origination if there are origination fees.  Appraisal fee is usually paid out of pocket in the beginning.  Keep in mind this is CA, its going to be different based on the state you live in.  Also, there are cases where there is a lender credit to help cover some if not a good chunk of closing costs, especially on FHA loans.  Just make sure you do your due diligence when shopping with various mortgage brokers/lenders as far as rates and fees.

On the last idea, lenders dont allow you to pay costs with credit cards.  Lenders usually like for you to have seasoned funds in the account for 2 months for down payment and closing costs.  But another option would be to obtain gift funds from a family member.

If you have any more questions, ask away.  Otherwise, good luck to you!

[mccallb]

Hey thanks.  So i'm looking at a 215,000 dollar house in south carolina. I dont know much about lender credit at all, today is the first I ever heard of one, actually.  

As far as paying costs with a credit card, you can't cover the escrow and title fees, i'm sure, what about things like the inspection or the appraisal? 

WRT the money in my account being seasoned, i have been planning to get preapproved for a house in June since last year, so to that end, I've been very careful financially to time it so that I hit the 10,000$+ mark on may 16th.  Its not that I have gotten extra money, i have a pretty good size expendable income amount, I have been using it, until this point, to get my DTI to look better.   The only source of income in the account is my payroll, so surely they can look and see that while I didn't have 10K in my account this month, the reason I hit it so fast next month, is because I didn't have any more things to pay off.

Or will they still want me to wait another 2 months after I hit a certain dollar amount? (no family member will be able to help me)