Currently, and for many years, FHA has charged a pre-payment penalty on loans that do not close prior to month end. This penalty is equal to the additional interest for the following month’s payment, which often results in larger payoff amounts, costing borrowers hundreds of dollars.........
This rule is changing for loans that close on or after January 21, 2015. Loans funded after this date will no longer be subject to this penalty, but will only allow servicers to charge interest through the date the mortgage is paid and prohibits the charging of interest beyond that date.
HOW YOU CAN USE THIS:
- For your home sellers who have an FHA loan, inform them they don’t have to close their home sale by month’s end to avoid the extra interest. They’ll appreciate your expertise!
We hope this helps you be of better counsel for your clients. Contact us any time with questions...we’re here to help!