Will FHA be flexible with seller closing cost assistance?
That is possible, according to a report from National Mortgage News late last week.
FHA guidelines have changed, and more changes are on their way. Beginning Monday, October 4, the new FHA changes take effect, including lower upfront mortgage insurance premium and higher monthly insurance premiums.
In July, HUD asked for consumer comments on their proposed changes, including the lowering of allowed seller closing cost help from 6% down to 3%. The major problem with reducing seller closing cost help is that in Maryland, closing costs are very high. Many times buyers need 4-5% above the required 3.5% down to help them close on the house, since most FHA homebuyers do not have much money to put down, many times their reason for using an FHA insured loan. By reducing the closing cost assistance down to 3%, many buyers would be disqualified from being able to purchase homes, and this could hurt the Baltimore housing market tremendously.
Though I understand the need to lower seller concessions, hopefully the amount will not be reduced as drastically as originally planned.
Maryland FHA homebuyers should take advantage of the low prices, high inventory, and high seller contribution allowance before any more planned changes go into effect. Contact me and I can help you navigate your way through the FHA mortgage process before there are more modifications!