First, congratulations on your accepted offer!
You are correct to note that Ameridream will take a fee from you to provide the down payment assistance "grant"... and I agree with your assessment (as a personal opinion) that seller-funded DPAs while legal are somewhat unsavory. I have refused to write such loans in my shop as a matter of principle.
Second, just a note of caution: The Housing Recovery Act passed July 31, 2008 calls for a ban on seller-funded down payment assistance grants for FHA insured loans effective October 1, 2008. Ameridream is one of the companies that provides such "grants".
Many lenders have already ceased to accept applications using seller-funded down payment assistance grants in advance of the Octover 1 deadline. The reason is that lenders need time after closing and funding to receive the FHA insurance endorsement. There are several lenders, however, who are working applications with seller-funded down payment assistance right up to the deadline.
I suggest asking your Realtor to contact the buyer's agent to be sure that the buyer's lender is willing and able to close by September 30th to avoid an unpleasant surprise at closing.
1.) FHA insured loans do not impose any extra costs or fees on the seller. The only possible exception would be repairs needed to ensure the house meets FHA standards - Maria is correct to note that FHA is much less stringent now than in the past.
2.) The maximum amount the seller may contribute to the buyer's closing costs is 6% of the purchase price. The seller may NOT contribute to the buyer's statutory down payment of 3.00% (and you are correct to note that the seller-funded Down Payment Assistance compnies are now barred from FHA insured loans effective Oct 1, 2008).
-> If the buyer's closing costs are less than the 6% maximum, the seller retains the difference.
-> If the buyer's closing costs exceed 6% of the purchase price, the buyer must bring that amount plus the 3.00% down payment to the closing and have at least $100 in reserve after closing.
No matter what the buyer wishes to write in the contract, the underwriter at the buyer's lender will play by FHA's rules.
It is my understanding that all downpayment assistance programs will be gone as of October 1st. Maybe you can get this deal done under the wire.
The 6% is probably 3% for downpayment and the 3% for closing costs. (Just a guess)
FHA requires 2.5%- 3% for downpayment.
Closing costs are things like: Whole House Inspection, Radon Inspection, Wood Boring Insect Inspection, Tax for 3 or 6 months held in reserve, Insurance for 3 or 6 or 12 months held in reserve, Mortgage Insurance, Commission, Recording Fees, Document processing fees, etc.
I can't see your paperwork from here so it's difficult to know exactly what is going on but I don't understand why your agent can't answer the questions you have. Ask her to consult with her broker or call her mortgage lender contact. Surely there is a realtor in her office who can help figure this out.
Let me clarify a bit. I have no problem with the FHA and the 6%, per say. What I really want to know (and should have asked clearly) is what types of costs are there to the seller due to the FHA and the 6% funding. What pitfalls should I look for or should I protect against (counter) in my acceptance of the offer?
And ,Yes, I asked my realtor and she said she's not a lender and doesn't know these answers (she suggested I call a bank and ask) but has done these types of sales before without problem.. (and people wonder why the public has a low opinion of the profession)
Hello....is anyone home?
The market has shifted.
My suggestion is not to take my word for it. Please consult with your REALTOR.
Most markets are buyer's markets. We ALL need to become accustomed to dealing with FHA...unless you'd prefer not to sell.
Just my opinion. (Disciiamer).