If one thing is for sure, its change. Things are always changing in the mortgage world so it is a good thing to have a knowledgeable Mesa mortgage loan officer on your side-to know the details, ins and outs and best recommended programs to meet your needs.
The FHA Anti-Flip rule has changed. But first, let me back up and explain the Anti-Flip rule. This rule has been in effect for much of the last 10 years and was put in place to prevent predatory lending. FHA would not provide mortgage insurance on a house if the owner had it for less than 90 days. Flipping occurs when homes are purchased and then sold within 90 days at an artifically inflated price to obtain a considerable profit.
Previously, FHA has not allowed any property to be sold for even a dollar more than the original price plus the cost of improvments which deterred many investors from the market (AZEmployeesAndTeachersHomeLoanPrograms.com). BUT the chang
e means the rule is being suspended for at least one year. The lifting of the rule will make more homes available to first time homebuyers wanting FHA Loans and/or assistance, it is meant to help low down payment buyers, investors who fix up foreclosures, and local communities burdened with too many foreclosures (LAtimes.com). So, they are once again providing mortgage insurance on homes in which the owner closed less than 90 days prior to the new sale.
There are minimal restrictions still in place regarding the flip rule of which are:
1. must be an arms-length transaction
2. if the price is more than 20 percent above acquisition price, lender conditions may apply
A group that may be interested in the change to this rule are investors. The goal of this change is to allow investors to purchase properties, fix them up and resell them. By doing this, it may help speed up sales. Now more homes will be available and first time home buyers will be able to qualify for FHA loans on these types of homes. This is a huge change for many, especially those looking to fix up and resell.
Photo: © Lisa Heuer Photography
