Coming Changes to FHA Rules Benefit Borrowers

January 2015 will be a good month for FHA borrowers, although planned changes may go unnoticed by most. Recently approved regulation governing the way in which the FHA handles sellers’ interest charges become effective just after the new year.

Interest Savings

Currently, when an FHA-financed property is paid off, interest is charged through the end of the month, rather than the amount owed on the actual payoff date. This causes the seller to pay almost an entire month’s extra interest even though he didn’t own the home. Not only is the dollar amount often a substantial sum, but the practice tends to clump closings near the end of each month, creating a processing burden.

Great news, The interest will now be calculated to the actual payoff date, rather than the next payment date.

The action eliminates what has been termed a pre-payment penalty by the Consumer Financial Protection Bureau. The Qualified Mortgage rule specifically prohibits such pre-payment penalties, according to an article in National Mortgage News.

In the future, FHA will be aligned with current practices of conventional mortgages secured by Ginnie Mae and Freddie Mac. The savings will accrue to FHA mortgage holders who sell property and close after the effective date of Jan. 21, 2015. The action will also have the effect of spreading closings more evenly on the calendar, according to analysts.

Monitoring Your Investment

It is important to keep abreast of any regulatory and procedural changes that affect your mortgage. Owning a home is a large and important financial investment, and as a full-time mortgage originator, Anthony VanDyke monitors the changes that affect borrowers.

If you have questions or concerns about an existing mortgage, or if you are investigating financing and refinancing options, contact us today to schedule a consultation. We work with residential clients in Utah and California, and have investment and commercial customers nationwide.

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