PROPERTY FLIPPING, THERE ARE MORTGAGE RULES TOO!

I recently read a post about property flipping. The Realtor basically said it's not as easy is it seems to make money flipping homes. So true. But now, Banks and Mortgage Lenders have their own rules about it. Some comments touched on the new 90 flipping rule/policy that many Lenders have. I thought I should clarify, that there are some other parts to this new rule. FHA started it and most Lenders now have the same requirement.

There are two parts to this. I hope this helps you in determining your carrying costs while waiting to sell.

Re-sales up to 90 days from last date of sale:

The property is not eligible to be financed! Exceptions are:

• Relocation company resale
• Resale - employer to employee
• HUD or other Government owned property (IE: VA, RHS, GNMA) being resold
• Property was inherited

Re-sales Between 91 and 180 Days From Last Date of Sale:

• A second appraisal by another appraisal company is required if the resale price is more than double the price paid when the property was acquired by seller.
• The second appraisal may not be charged to the homebuyer.
• If there was significant rehabilitation of the property, these costs may be documented and the transaction may be considered as an exception.

Properties sold over 180 days up to 12 months of prior sale:

These sales should be carefully reviewed. The underwriter (and HUD) may request that the value be justified and may require additional documentation to support any increase in value.

Additional Note: Policy Sale by Owner of Record:

The seller must be the Owner of record. The property must be purchased from the Owner of Record and the transaction may not involve any sale or assignment of the sales contract, regardless of the length of time between re-sale.

Any questions, contact Kristeen at kristeen@firstportland.com or visit our webasite for other tips: www.firstportland.com