FHA Loans still allow a 6 percent seller concession. Yes, there has been talk of FHA lowering the seller concessions down to 3 percent across the board. This was first talked about in February of 2010 and was placed for public comment in July of 2010. The end result is that it still hasn’t been changed as of today, February 8th, 2011. Yes, some lenders have what are called lender-overlays, which brings me to this update.
What one needs to be careful is where they get their mortgage information from, no matter if it’s from a loan officer or a real estate agent. Just the other day I came across an answer from a realtor stating that FHA allows up to 3 percent from the seller as a seller concession, aka seller paid closing costs. As I have stated, this is 100% incorrect and can sometimes vary from lender to lender, which is called a lender overlay. This realtor claims that one of the big banks is stating that the FHA seller concession is 3 percent. Just because a big bank and or mortgage lender has this guideline, doesn’t mean that it’s the same for everyone. This realtor told me that she is just stating what her loan officer has told her.
Summary : Seller concessions for FHA loans is still 6 percent. I highly advise that you be very careful when speaking to a realtor about mortgage specifics. You should be getting your mortgage questions answered directly from a loan officer. And even then, you still need to be careful. In the scenario above, if you were to only talk to the loan officer from this large bank, you would think that the FHA seller concession or seller paid closing costs would be the same for everyone. Keep in mind that FHA makes up the rules and guidelines and it’s up to the mortgage lenders and banks to follow them, unless they come up with their own additional guidelines which they are allowed to do. As mentioned above, this is called a lender overlay.
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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc