Is there a minimum occupancy period before I can sell my house?
Yes. FHA's security instruments require a borrower to establish bona fide owner occupancy of the home as the borrower's principal residence within 60 days after signing the security instrument with continued occupancy for at least one year.
I have an FHA loan now and want to sell and move to another home. Can I also apply for a FHA loan for the home I am buying?
Subject to certain exceptions, you cannot have more than one FHA loan at a time. Therefore, generally speaking, if you now have an FHA loan, you should pay off your current home first.
Will I have to pay a pre-payment penalty?
FHA mortgages have no prepayment penalty if prepayment is offered on other than an installment due date.
However, some lenders may require you to pay interest until the end of the month if you pay an FHA loan on any date past the first day of the month. This practice is allowed under FHA rules and is left to the lender's discretion. So please be sure to ask your lender before you sell, as this issue could have an impact on your sales proceeds. You can also request more information by calling 1-800-CALL-FHA.
Can a buyer assume my mortgage?
Yes. All FHA loans are assumable when processed using HUD's guidelines. Mortgages closed on or after December 15, 1989 require credit qualification of those borrowers wishing to assume the mortgage. All FHA assumptions will be processed by your current servicer. You should contact the assumption department for your mortgage servicer for more information.
If you're putting your home on the market, be sure to mention that the home qualifies for an FHA assumption. You'll open the door to a larger pool of buyers.
If I find a buyer to assume my mortgage, who will get the refund of the MIP (if any)?
If your FHA loan was originated after 1983 and you have paid it off, you may be due a refund for your MIP (mortgage insurance premiums) charged to guarantee the loan. FHA loans carry mortgage insurance that you pay monthly for seven years. When the FHA loan is assumed, the mortgage insurance remains in force and the seller receives no refund. The owner of the property at the time the insurance is terminated is entitled to the refund. To find out if you are entitled to a refund, call HUD at 1-800-697-6967.
Additional resources provided by the author
(1) 1-800-CALL-FHA; (2) Department of Housing & Urban Development, 1-800-697-6967
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