FHA loans have been in the news recently due to the increase in the FHA mortgage limits, up to $729,750 for single family homes and the fact that buyers can get an FHA loan with a much smaller down payment - as low as 3% down.
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If you are a Pasadena home seller, it is critical to be aware of the following:
- Pasadena home buyer with less than 20% down in almost all instances will need PMI insurance (Property Mortgage Insurance.)
- PMI rates are going up quickly and making it more expensive for home buyers which in turn makes the home that they want to purchase NOT affordable. Most home buyers are not aware of these changes in the lending/mortgage industry until they are already in escrow.
FHA loans have very specific requirements for home buyer expenses. These fall into allowable and NON-allowable expenses. Non-allowable expenses are usually paid by the SELLER!
To qualify for an FHA loan, Pasadena home buyers can NOT pay for the following expenses:
- Sub-Escrow Fee to Title Company
- ALTA Endorsement Fees
- Some Inspection Fees
- Recording Assignment Fees
- Processing Fees
- Document Preparation Fees
- Tax Service Contract
- Any Messenger Fee including Overnight Delivery
- Loan Tie-In Fee
- Bring-Down Fee
- Title Binder
- Tax Stamps/City Transfer Tax Charges
- Homeowner Association Transfer Fees
- Repairs or work required on FHA appraisal (unless approved in advance by lender in writing)
- Home Warranty Program - (unless stipulated in escrow instructions and approved by lender in writing)
- Photo Fee/Photo Inspection Fee
- Reconveyance Fee
- Preliminary Change of Ownership Report
- Transaction Coordination Fees
If you are a Pasadena Home Seller and you receive an offer from an FHA home buyer or are in escrow with an FHA home buyer, please be aware that these fees will most likely come out of YOUR pocket.
FHA loans offer a very viable financing option for many buyers and I think that we will see more home buyers with FHA financing in the coming months, but Pasadena home sellers need to understand the financial impact to them.
Make sure that your Pasadena Real Estate Agent provides you with an estimated closing costs statement so that you know your home sale bottom line.
Remember information is KING!
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If I can be of any assistance with your Pasadena Real Estate needs, please do not hesitate to email me or call me at (626)629-8439. Thank you!
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Thinking of selling your home? Interested in finding out the current market value of your single family home, condo or investment property? Then call Irina Netchaev at (626) 629-8439 to discuss what is happening in today’s Southern California Real Estate Market.