Selling Your Home Purchased With an FHA Mortgage
June 7, 2019
If you buy a home using an FHA home loan, there are built-in protections. Those protections include rules that prevent loans for certain properties such as condo units or homes in neighborhoods with homeowner association agreements that don’t allow the borrower to freely sell or transfer the property.
In other words, when you buy a house with an FHA mortgage you must be able to dispose of it as you see fit via a sale, loan assumption, or other transfer. But are there rules for those who sell their homes purchased with FHA loans?
Not exactly-the owner is free to sell at any time. But there ARE rules that can affect whether that property may be sold to a borrower who also wants to use an FHA loan.
FHA Anti-Flipping Rules
FHA anti-flipping rules do not tell the homeowner she cannot sell a property purchased, renovated, and put back on the market in a short amount of time, even those secured by an FHA mortgage.
What the loan rules DO say is that FHA financing is not permitted for homes that have been owned for a very short amount of time (up to 90 days) and returned to the market.
This means that you, the seller, don’t have any regulations to worry about as the seller, but you WILL have those regulations to deal with when a buyer comes along with an FHA loan.
There are some exceptions to anti-flipping rules, especially for those who have inherited property-ask your lender about your specific circumstances and how they may apply to your home loan transaction.
FHA Appraisal Rules
Remember that selling your home requires an appraisal and if you are trying to set a price on the property you will have to contend with the appraised value if it is significantly different than the asking price.
Government backed loans generally have clauses that say if the asking price comes in higher than the results of the appraisal, the borrower cannot be forced to close the deal as the difference cannot be financed into the loan amount.
When setting your asking price, this should definitely be a concern.
Don’t forget that in most cases you cannot ask the lender for a new appraisal simply to change the valuation of the home.
If there is an error in the appraisal or the appraisal neglected to address certain issues, you may be able to appeal, but these issues are handled on a case-by-case basis and there is no guarantee that the new appraisal would return results substantially different unless there are errors in the original or new information that must be added.
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In other words, when you buy a house with an FHA mortgage you must be able to dispose of it as you see fit via a sale, loan assumption, or other transfer. But are there rules for those who sell their homes purchased with FHA loans?
Not exactly-the owner is free to sell at any time. But there ARE rules that can affect whether that property may be sold to a borrower who also wants to use an FHA loan.
FHA Anti-Flipping Rules
FHA anti-flipping rules do not tell the homeowner she cannot sell a property purchased, renovated, and put back on the market in a short amount of time, even those secured by an FHA mortgage.
What the loan rules DO say is that FHA financing is not permitted for homes that have been owned for a very short amount of time (up to 90 days) and returned to the market.
This means that you, the seller, don’t have any regulations to worry about as the seller, but you WILL have those regulations to deal with when a buyer comes along with an FHA loan.
There are some exceptions to anti-flipping rules, especially for those who have inherited property-ask your lender about your specific circumstances and how they may apply to your home loan transaction.
FHA Appraisal Rules
Remember that selling your home requires an appraisal and if you are trying to set a price on the property you will have to contend with the appraised value if it is significantly different than the asking price.
Government backed loans generally have clauses that say if the asking price comes in higher than the results of the appraisal, the borrower cannot be forced to close the deal as the difference cannot be financed into the loan amount.
When setting your asking price, this should definitely be a concern.
Don’t forget that in most cases you cannot ask the lender for a new appraisal simply to change the valuation of the home.
If there is an error in the appraisal or the appraisal neglected to address certain issues, you may be able to appeal, but these issues are handled on a case-by-case basis and there is no guarantee that the new appraisal would return results substantially different unless there are errors in the original or new information that must be added.
------------------------------
RELATED VIDEOS:
Homebuyers Benefit From the Work Done by Fannie Mae
HUD 4000.1 is Sometimes Called the FHA Handbook
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