What I want to discuss is once you’ve determined you want to work with an agent who is going rebate part of their income back to you – how do you do it?
You see – FHA does not allow you to receive money back at closing from the Builder, Seller or Agent. It’s considered an “Inducement to Purchase” and it’s just against the law. In fact, loans that have ANY form of downpayment assistance do not perform as well, and even those “Traditional” Nehemiah type programs left the marketplace on Octover 1, 2008 – leaving only NC Housing Finance Agency (NCFHA) offerings for down payment assistance for a mortgage.
Sooooo – back to HOW do you do it. First off, do not for a second believe that you are going to “walk away from the table” with the money your agent is sharing with you. That money can be used towards closing costs. If you don’t have enough closing costs (meaning for instance the agent is rebating $2500 to you, and the seller is paying closing costs, or your cost are only $2000) then you REALLY have to be creative!
What needs to happen in this case is that the money you are receiving from the Agent needs to be paid to the loan as additional downpayment. You can’t get the money back in your pocket. It can not be the 3.5% down that FHA requires, or the 5% for Conventional… but it can be applied to the mortgage so that you owe just a little bit less… or… It can be used to pay the Upfront FHA PMI – or the USDA Home Loan “Guarantee” Fee.
I’m not sure why you would want to do that – as opposed to just reducing the sales price by that amount – but that’s how it can be done.