Special offer

FHA- Funds to Close

By
Real Estate Agent with Re/Max Masterpiece Realty

 

Many FHA buyers do not have a lot of money when purchasing their first home. Nothing wrong with that. Nothing to be ashamed of. It is just life.

But if you are one of those buyers, please remember: you have to bring to closing at least 3.5% of the purchase price. So if you are purchasing property for $100,000, you have to have at least $3,500.00. At least, because on top of that you will have your pre-paids and closing costs.

Prepaids are Real Estate Taxes and Homeowner Insurance that your lender will ask you to deposit with them (between few months to one year worth- it will be responsibility of lender to pay those when time comes, so they want to make sure that they have enough).

You are going to find out what your closing costs will be from you lender and those may range between $3000.00 and $6000.00.

So with this $100,000.00 priced home, you may have to bring over $10,000.00 to closing. Good news is that closing costs could be paid by seller (6% of the purchase price). But like I mentioned in my first article- that is not likely to happen in “Seller’s Market” (for seller to lower price, because that is essentially what paying for your closing costs is-lowering price ).

What can you do?

Someone can give you money (parents for example). But with that, you are going to have to prove that they actually gave you the money and you don’t have to pay it back. Also, they have to prove that it was their money to give (bank statements showing the amount, then copy of canceled check made out to you, etc). And that goes for anything that reaches your account. When your lender asks you for copies of your bank statements, any large amount ($500 or more) will have to be explained. You can’t borrow money to pay for your closing costs and pre- paids. Be prepared.                   

 

Call Anna Chroscicki at 772-485-4188

email anna@annasellsrealestate.com

Visit www.annasellsrealestate.com to search all listings on MLS.  

Comments (1)

Mike Sasse
OfferPad Home Loans, LLC - Scottsdale, AZ
Sales Leader

Gift funds are commonplace in Hawaii, most first-type homebuyers don't even have close to 3.5% to purchase anything decent. Just need their parents to sign a gift letter and need to verify the funds are present (just 1 month's bank statement will do.) Typically it is not a problem, just needs to be from a family member, not just Bob from down the street. Definitely need to be careful with cash deposits, that is something your loan officer needs to be responsible for explaining/monitoring with the client up front.

Oct 11, 2015 06:43 PM