In the Phoenix market at this time I am seeing a lot of offers that are using FHA with a gift program using sellers funds to pay the downpayment and or closing costs.
Mostly this has been 3% to the closing costs and 3% to the downpayment.
More and more im seeing 5% to the closing costs, are teh costs going up or are the lenders just padding the bill at the sellers expense?
All they are doing is make the offer less appealing to the seller and the buyer looses on a home or the seller takes it and feels ripped off.
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I am client focused results based Realtor whose interest is in "getting our clients from where they are to where they want to be" My team and I service the entire Phoenix Metro area.
Phoenix area road closures weekend of October 24 ~ 27
Some information regarding the upcoming elections in AZ.
30-Day Market Snapshot as of 10/18/2008 (from ARMLS for past 30 days – residential sales only)
Metro Phoenix Weekend Closures & Restrictions on Valley Freeways
Pending home sales are rising, the western states lead the advance.
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Why are buyers asking for 6% closing costs
Its not all about Price remember the effect of interest rate
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Andrew: One guess might be that the added "closing costs" are actually prepaids. I have seen that the typical amount asked for in Nehemiah programs has at times been 8%.
Can you get the lender to send you a HUD statement to justify what they are asking?
Veroncia
Hi Andrew:
I am a loan officer who does a lot of down payment assistance programs. Our real estate taxes in Texas are quite significant. Typically when asking for closing costs to be paid we ask for 6%. This would cover closing costs AND prepaids (not the downpayment). If by chance, there is money left over we often will use it to buy down the interest rate.
Now, the 3% for downpayment is not included in the 6% closing costs. FHA guidelines bascially state that a gift from a non-profit is not to be included in the seller contributions.
However, the lender should have structured the numbers such that your seller is still netting the same amount of money as you anticipated. It may be that the lender did not do this in your case. It is my understanding that not a lot of lenders did FHA loans prior to the fall of subprime loans.
Another reason your closing costs could seem to be higher is the amount of taxes that are being collected. Take a look at the estimate and see if the fees look elevated.
Of course, I can not do loans in Arizona, but if you want to send me the GFE, I will be happy to look at it for you.
Good luck!
I see a few of these too, what a concept, to give away some of the equity in the home to a buyer. Unless you have to, why do it?