The Changes On FHA Loans And How They Will Affect Borrowers And Sellers

What are they? Contributions that sellers kick in to help defray a buyer's costs. They can include closing costs, inspections, appraisals and free upgrades. What's changing? The FHA proposes slashing allowable seller concessions in half, capping them at 3 percent of the home price instead of the current 6 percent. Why? FHA analyses show a strong correlation between high seller concessions and high default rates, possibly because the concessions can lead to inflated home prices. The theory is that some sellers might make concessions only to add the cost to the price.

To read the entire article, please visit : http://www.washingtonpost.com/wp-dyn/content/article/2010/07/29/AR201007...

SOURCE: Published by NAMU® Publishing Group, a division of the National Association of Mortgage Underwriters (NAMU) (http://www.mortgage-underwriters.org)