Coming this summer, the FHA will lower the maximum amount that seller’s can contribute for buyer’s closing costs. Currently, the seller can pay a maximum of 6% of the sales price towards the buyer’s closing costs. Starting soon, it will be reduced to 3% of the sales price. The change will take place in “early summer,” according to the FHA, but no specific date has been set. Buyer’s closing costs typically range from 3.5-5%, so this is no longer a sufficient amount to fully cover the closing costs.
This to me sounds backwards. The purpose of the tax credits, low interest rates, and all of this adjustment to lending practices was to get people into homes. Of course, they need to be able to afford the home and be well-qualified to maintain payments, but why regulate closing costs? If a buyer asks for closing costs to be paid it doesn't mean they aren’t well-qualified. It just means they are trying to minimize out-of-pocket spending. If the seller has sufficient equity in his home, it makes no difference if they pay the buyer’s closing costs because it will just come off the bottom line pay out. It can just come out in negotiations. For instance, house is listed for $200,000. Buyer offers $202,500 with $5,500 in closing costs and as long as it appraises, it works. See what I did there? I’m a wizard.
I just don’t see the point of lowering seller contributions right now. Especially when the government was throwing $8,000 non-repayable at people to buy. It’s an abrupt change from seemingly doing anything they can to get people in, to making it difficult with a rise in FHA mortgage insurance premiums and now reduction in seller contributions.
It’s one of those things we may never understand, like why Hollywood doesn’t put Jeff Goldblum in more movies. The guy hasn’t been in a big time role since Jurassic Park in 1997! He’s The Fly! Jeff and I once had an intimate, one-on-one conversation, no joke. Let me take you back to a time when I was enrolled at Calvin College in Grand Rapids, Michigan. I worked part-time at a market research firm as a Senior Research Specialist. One day we were doing a survey on a certain hospital branch (confidential) in California and calling Los Angeles-area residents. Well, my system auto-dialed a man named ‘Jeff’ and I swear it was Jeff Goldblum.
Jeff Goldblum has a very distinct voice, he probably lives somewhere in Los Angeles, and this guy’s name was Jeff! All of that equals that I spoke to a movie star. Jealous? The guy was super nice, very intelligent, and we spoke for about 30 minutes about my college life, living in California, the health care system, and he even gave me relationship advice that led to me breaking up with my girlfriend! Jeff said, “She’s no good. You can do better and you deserve better, Chris.” When Jeff Goldblum gives you advice, you listen. He sounded EXACTLY like Jeff. I feel after our conversation I’m comfortable enough for a first-name-basis relationship. Jeff has a nice voice. It’s different, but rhythmic.
You’re probably wanting to know, “Why didn’t you just ask if it was Jeff Goldblum if you guys are like best friends?” Well, easy answer. Jeff doesn’t need to be hounded. Talking to some market research guy in Michigan is the only place Jeff can find anonymity and be unrecognized for a brief moment. Who am I to destroy and violate that with my accusations? Hollywood hasn’t been nice to Jeff lately, so I took it upon myself to do him a favor. So long-story-short, ever since that day, I’ve been a Jeff Goldblum fan and I know for a fact that Jeff would agree that seller contributions should not be reduced.