Does a FHA mortgage have more cost and requirements than a conventional loan? There are no additional costs involved, as far as an FHA loan that a seller must bear as far as the closing is concerned. In some instances they may require them to pay a $79.00 tax service fee, but other than that, there are no particular additional costs that must be borne by the seller if he sells to someone who’s getting an FHA loan.
FHA loans however do have a contingency that if the property does not appraise for the amount necessary to obtain the loan, then the deposit must be fully refunded. So whenever you see that a buyer’s getting an FHA loan you really need to be concerned about the appraisal and the deposit needs to be fully refunded.
As far as the buyer is concerned they have to, of course, be credit worthy and they will have the additional cost since it’s a high cost loan so they charge for the insurance or the cost of the high priced loan in that you can get a 97% and possibly even higher percentage loan. That’s the primary increase in the closing cost, is the mortgage insurance if you will or what is charged by FHA for the high percentage loan to value which you may have to pay, continue to pay or there may be a lump sum amount in your monthly payments or there may be a lump sum amount in the front end of an FHA loan. But as far as the seller is concerned there are no additional costs. However, if there are any, it’s nominal; the same thing with the VA loan. I may have that confused at the $97.00 or $76.00 for a tax service fee, something that a seller has to pay.
So the biggest thing is whether or not the people will qualify money-wise and whether the property will appraise for the amount necessary to get a FHA loan. So if you like to sell your house or need some help with financing or closing the transaction, well give me a call at 727-847-2288.