Flipping over Flipping

For those of you that aren’t aware of the term, a “flip” is the rapid sale of a property from the time it is first purchased to when it is sold.  In our marketplace there are challenges to obtaining financing if a seller has not been in title for at least 90 days.  Please note:  the 90 day time period is based on the date the purchase agreement is written, not the close date. Under specific conditions, the 90 day minimum ownership period can be waived for both Conventional and FHA loans.

For Conventional loans, these conditions include:

• Properties acquired by an employer/relocation agency in connection with the relocation of an employee.
• Resale by a lender when the property is obtained through foreclosure or a deed (in lieu of a foreclosure).
• Resale of property obtained through an inheritance, acquired from a family member, or as part of the property settlement in a divorce.
• Properties acquired for the purpose of rehab/upgrading.

For FHA loans the following expectations apply: 

• If the sales price is not greater than 20% above what the seller paid for the property.
• If the increase is greater than 20% a second appraisal will be required along with a home inspection ordered directly by the lender. 
• It’s important sellers are aware that health and safety issues identified in the home inspection will need to be addressed prior to closing.

Now you know all about why lenders are flipping over flipping.

PRM, Your Solution Based Lender