October 13, 2014
A reader asks, “What are the standard closing costs for FHA/HUD/HECM for my property with market value of 510,000.00 with 240,000.00 in debt?”
FHA loan closing costs are not standardized–they vary depending on the market, the lender, the nature of the services required to underwrite and close the loan and other factors. State law can and often does affect certain types of loan transactions so there may be factors there that might not apply elsewhere.
The Department of Housing and Urban Development publication “Shopping For Your Home Loan: HUD’s Settlement Cost Booklet” breaks down how things can are are charged, but only uses examples and does not come with set, across the board settlement costs–you won’t find a HUD publication that can tell you exactly how much the settlement costs will be for a particular lender or housing market.
That is why it’s very important to discuss your needs with a loan officer, especially when considering an FHA HECM loan. FHA HECM loans have had significant rule changes that alter how the program is administered depending on the nature of your loan, the nature of your interest rate agreement and how the funds are dispersed to the borrower.
Settlement costs are an important issue with any home loan–how the borrower deals with those costs in terms of financing or paying in cash can affect the loan amount, the amount of the mortgage due each month (except in the case of FHA HECM loans which have no monthly mortgage payment) and other factors.
It’s never a bad thing to discuss your needs with a loan officer, even if you aren’t convinced now is the right time to fill out the loan paperwork. An informed borrower is far happier with the outcome of the loan application process.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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