Foreclosure in Pinole>Question Details

Inga02, Home Buyer in Rodeo, CA

what are the chances of the bank or home owner to pay for closeing cost with a FHA LOAN??

Asked by Inga02, Rodeo, CA Sat Feb 27, 2010

Help the community by answering this question:


Old question, but still very current.
Although the home owner (seller) may not want to assist with closing costs on a transaction...especially in today's market in Contra Costa County...but as a lender, we can set your interest rate slightly higher and apply the lender's rebate toward your closing costs. In most cases, we can cover the bulk of those costs.
There is also a down payment assistance program available for buyers. The buyer does not need be a first time homebuyer for this program.
0 votes Thank Flag Link Thu Dec 11, 2014
This depends on the price submission. If the price is at asking or over depending on the appraisal. The seller has the choice to allow closing cost credits.
0 votes Thank Flag Link Wed Dec 3, 2014
This depends on the price submission. If the price is at asking or over depending on the appraisal. The seller has the choice to allow closing cost credits.
0 votes Thank Flag Link Wed Dec 3, 2014

Anything is possible when you are the sole offeror on a property. Credtis back will not fly in a multiple offer situation. Sellers and their agents are selecting the strongest possible buyers in this market and many agents are strategically pricing to drive multiple offers in order to find those buyers. Throwing money at sellers used to work until the banks realized that sort of activity created the bubble. Keep looking and be patient. Be "zen" about the home purchase. Say to yourself "It will happen when it was meant to happen" nd keep working at it but most of all keep saving.
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0 votes Thank Flag Link Mon Mar 1, 2010
REO, or Bank Owned property, can qualify for Seller concessions. As stated previously, these concessions will soon be limited to 3% from the current 6% now allowed. Most Banks have been limiting Seller Concessions to 3% lately, so even if you act quickly you may not be successful in getting concessions for the entire 6% from them anyway. The same holds true for private sales. Sellers can currently agree to provide 6% concessions to those Buyers who are using FHA financing, but the new limits go into effect in April.
0 votes Thank Flag Link Sun Feb 28, 2010
This is standard practice in the Bay Area. A few things you should know...

1. You need to ask for the credit in your initial offer.

2. Asking for the closing cost credit will weaken your offer compared to offers that don't ask for the credit so if there are multiple offers and you can get by without the credit, don't ask for it.

3. When you ask for a closing cost credit this lowers the net amount the seller is receiving so if you are competing against other offers you'll want to increase your offer to cover the closing costs if possible. However, you will also want to be careful that you don't make an offer that is so high the appraisal will come in lower than your offer price. Your agent should review the comparable properties on the market and help you understand what price range the appraisal will likely fall into.

4. Most sellers (especially if it's a bank owned property) will only allow for a 3% credit. The new FHA guidelines will go into effect in April and they will only allow for a 3% credit.

5. As @Robert has said, you need to be careful of property condition when buying a home with an FHA loan. There are certain health and safety issues that must be addressed for a buyer to use an FHA loan. In our current market most sales are "as is" and if those repairs are necessary you will need them to be done before close of escrow. An experienced agent will be able to spot most issues that will come up an issue but the appraiser has the final say on what issues must be taken care of before closing.
0 votes Thank Flag Link Sun Feb 28, 2010
I am currently negotiating a short sale and the seller's lender has agreed to the 3% credit back to be deducted from the sales proceeds for an FHA loan. However, this 3% credit back was incorporated into the purchase contract when the offer was first made.

Sylvia Barry
Frank Howard Allen Realtors
0 votes Thank Flag Link Sun Feb 28, 2010
Sylvia Barry,…, Real Estate Pro in Marin, CA
This depends on a variety of factors. Assuming you are working with a buyer's agent, your agent should assess whether the property is priced to allow room for closing costs. For instance, if market value is 250k and the property is priced at 245k, you could offer 250k and ask for 5k credited back in closing costs. Check with the FHA lender you will be using for the loan, FHA has recently amended its guidelines for closing cost contributions, credit score requirements, etc. Another important consideration on FHA loans is the current property condition. Asset managers typically do not want to make any repairs to their bank owned properties also known as REO property. Conditions, if not cured, might preclude an FHA loan from being placed upon the property. An experienced agent may be able to make a reasonable determination after a careful visual inspection. To be certain, an appraiser will make that call when they perform their inspection. Often, the listing agent will enter data into MLS that may express limitations on FHA financing. These limitations make the FHA offer somewhat less attractive than similar conventional offers. With this in mind, it is important to offer enough to make the FHA offer overcome the inherent shortcomings.
0 votes Thank Flag Link Sat Feb 27, 2010
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