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FHA Closing Costs
|FHA Closing Costs include a lot many things that are usual under a conventional loan program. However, the loan origination fee is not more than one percent of the amount borrowed under a loan program insured by the Federal Housing Administration. The closing costs are entirely borne by the buyers and should be paid in cash. In certain circumstances, it is allowed to use grants or some other sources of fund.
Moreover, a portion of FHA closing costs can also be paid by seller provided certain conditions are met. A Good Faith Estimate is sent by the lender to the borrower prior to the closing of a mortgage. It lists an estimate of all fees, charges and expenses one should expect at closing.
FHA Closing Costs Calculator
The usual components of FHA closing cost include attorney’s or escrow fees, property taxes, interest, loan origination fee, recording fees, survey fee, upfront mortgage premium, title insurance, loan discount points, first payment to escrow account, paid receipt for homeowner’s insurance policy and documentation preparation fees.
These components may vary from one lender to another and from one loan program to another. The closing cost also depends on the locality where the mortgage underwriting procedure is completed.
It is a good idea to use an FHA calculator to know what makes up your closing costs. Though you would not find such a calculator at the website of the US Department of Housing and Urban Development there exists a few on the website of Ginnie Mae. You can also find an FHA Closing Costs calculator at a third party website or at the website of your lender.
FHA Closing Costs Guidelines
Recent guidelines have put some restrictions on the contribution a seller can make towards the payment of closing costs. According to a source, only 3 percent of sales price can be paid by seller in 2011 to meet this requirement.
The amount is paid to the lender’s agent, and in return, a buyer is provided with a settlement statement, which is a HUD-1 form that itemizes all services provided and fees charged. Apart from this, you are also provided with a Truth-in-Lending Statement, Mortgage Note, Mortgage or Deed of Trust, Binding Sales Contract, and of course the keys to your new home.
For more information regarding FHA closing costs limit, percentage, credit, rules and guidelines and further assistance, browse the website of the US Department of Housing and Urban Development.