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FHA Mortgage Fees Could Increase Soon – chicagotribune.com

FHA mortgage fees could increase soon – chicagotribune.com.

I read this article today and think it provides a very good summary of some changes coming to FHA Loan pricing.  What it does not discuss well are the “real world” limits on credits at closing.  In Illinois, the seller “by law” provides all of the title insurance cost on the seller’s side.  Plus, in Illinois, our tax system forces nearly a year of taxes to be credited at closing so that they can be paid the next year.  When you consider all of the forced credits in Illinois, the bottom line is that you may not even get a 3% credit for closing costs approved, especially if your purchase is less than $100,000.

HERE IS A GOOD RULE OF THUMB:  Never purchase a house for more money that you really want to offer even if you are getting a 3% credit for closing costs.  Instead, haggle for a very aggressive price that is good for you as a buyer then demand the 3% credit for buyer’s closing costs as simply an incentive to get you to sign on the offer.  Never count on the credit for closing costs as the seller may not be allowed to give the credit to you.  Also be aware that seller payments made to you outside of the closing escrow process are forbidden, illegal and will get you into serious trouble with the federal government.

 

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