If they're really trying to help, I think they should remove the cap on the seller's profit margin. Right now they are capped at 20% above acquisition cost.
All the best!
The trick is working with a Lender who is well versed in FHA loans. If you need a referral, I know of a dynamite lady who knows not only FHA, but VA loans, forwards, backwards, and all around the middle.
I'm a Realtor myself and I find that making it a practice of using and referring only the best professionals ensures a smooth transaction for my clients. If I can ever be of assistance, I'd be greatful for the Opportunity.
Happy House Hunting.
HOWEVER, it's a lender to lender decision on whether they will originate loans on flip properties.
Some flat out won't, others will with stipulations, and others (like the company I work for) it's business as usual.
Hope this helps
Licensed Loan Originator
Amerifirst Financial, Inc.
1910 S. Stapley Drive #209
Mesa, AZ 85204
NMLS# 213777 AZ LO-0915068
Apply Online: http://www.mattpuzz.com
Flips are still a hot topic in the industry. Some of lenders â€“ BofA and US Bank â€“ are telling us that they will not purchase them under any circumstance and the private mortgage insurance companies are making it virtually impossible to approve. So, with flips you are best to have 20% down.
We have been funding many flips on a case by case basis but they will endure a great deal of scrutiny. A flip is when the current owner has been on title less than 90 days. Date of ownership is determined by the date the deed recorded, not the date purchased on the County steps.
Hot points which subject the loan to even more intense scrutiny areâ€¦
Â· Contracts written within the first 30 days after the seller has taken title. This raises a lot of questions. Was the property marketed at all? Is there a relationship between buyer and seller? How can a big price increase be justified when little or no improvements have been made? The industry is very wary of these transactions.
Â· More than one flip in the last 12 months.
Although HUD came out in 2010 and said that they would allow FHA mortgage insurance on flips (owned for less than 90 days), the guidelines were so restrictive that it made it a not workable solution.
If you want to lessen the scrutiny, then write your offer on the 91st day.
If your buyer has less than 20% down, it is imperative that you know the property history. I highly recommend that you write your offer on the 91st day. And yes, the underwriters count the daysâ€¦Day 90 is still a problem; on day 91 you fall outside of the flipping guidelines and you are OK to proceed without any flipping overlays. For now, at least.
If you have any questions or a particular scenario, please feel free to call me.