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Pasadena California Sellers: What you NEED to know about FHA loans

FHA loans have been in the news recently due to the increase in the FHA mortgage limits

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.

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
Commission
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!

Questions? Comment below.