CLOSING COSTS ON AN FHA LOAN PROGRAM
On an FHA loan how much can a buyer ask for in closing cost assistance?
6% of the purchase price is the answer to the above question.
Now let's dig a bit deeper on this topic.
When you begin your home search the first point of action is to get with your Realtor.
They work with professional lenders that will help you in finding the perfect loan program for you and your needs.
The FHA loan program is very popular as it allows for only a 3.5 percent down payment.
The downpayment is not the closing costs that are referred to in the highlighted section above.
The closing costs are an additional expense that is involved in the loan process.
Can this be rolled into the loan and or added into the contract?
Yes, it can, as a Home Buyer you can ask the seller to pay the closing costs.
As you consider this aspect of the home buying process it is best to visit with your Realtor to better understand the current market trends.
When asking the seller to pay for closing costs, the seller will more than likely look at this expense paid out as part of what they will net after all fees are paid.
As a home buyer you may ask can I raise the price of my offer to compensate for the closing costs that are being asked for?
The answer to this question is yes you can. Although there is the question of if you go over the asking price,(which is what a lot of home buyers are doing these days) will the home appraise for the agreed-upon price point in the contract.
EXAMPLE:
The home you are wanting to place an offer on is listed at $210,000
you need $12,600 in closing cost assistance.
You raise the price to $223,000
Will an appraiser agree that the home is valued at $223,000
Possibly as we are seeing this happen in the housing market with the current status.
Values are rising quickly.
There is a risk involved with giving over the asking price.
If the appraiser does not give the value needed negotiations will be needed.
Will the seller agree to lower the price to the appraised price point?
Will you have the money to bring to the table to make up the difference in the appraised value and the agreed-upon sales price?
All questions will need to be answered as you move through the buying process.
Please feel comfortable reaching out to us with all your Real Estate questions.
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