Good news, FHA mortgage holders: The Federal Housing Authority recently announced a policy change that could save you and other home-sellers with FHA mortgages, collectively, hundreds of millions of dollars a year.
While in the past, homeowners with FHA loans who paid off their mortgages in full were hit with “extended” interest charges, this practice will soon be eliminated.
Here’s how the system worked previously: “Say you went to closing on an FHA loan Sept. 3,” explains the Washington Post. “Under standard industry rules followed by Fannie Mae, Freddie Mac and the Department of Veterans Affairs, your interest charges cannot extend beyond that date. But under FHA’s long-standing policy, lenders have been allowed to hit you with interest charges through Sept. 30.”
Beginning Jan. 21, 2015, FHA lenders will only be allowed to collect interest on the balance remaining on the date of closing, both for a home sale or refinance.
The National Association of Realtors has supported this change for more than a decade. NAR President Steve Brown told the Washington Post that the policy change was “long overdue” and it should “result in cost savings for millions of Americans who rely on FHA-loans to purchase their homes.”
For more information on this or other lending questions, call or email Sean Mahoney or Cameron Burl (email@example.com, firstname.lastname@example.org, 303-321-8800. And keep your eye on our financial blogs for updates like these.
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