No. of Recommendations: 1

My wife and I bought this house with FHA first time homebuyer $$

I'm not sure what you are saying here. FHA is a source of mortgage guarantee that is often used for first time buyers, but nothing in their guidelines says the borrower must be a first time buyer. Therefore, it could just be that your understanding of the financing wasn't clear on that point, or it could be something else. One of the things it could be is that some kind of county or state "grant" or source of downpayment/closing cost assistance was combined with FHA to aid you in being able to buy the home. I hope you can clear that up for me. One of the surest signs of the latter scenario is if you have a second mortgage that was gotten at the same time (even if no payments were needed on it).

I have read that FHA loans can be accelerated if they are sold to a person who "is an investor, or whose credit has not been approved in accordance with HUD requirements".

You have read correctly. FHA mortgages originated since 1986 (87?) are qualifying assumables. That means that if you bought your home sometime after 1987 that the buyer cannot assume your loan without qualifying through an FHA approved lender (in which case if they do, you want a "release of liability"). If you sell the home without the buyer qualifying, then FHA has the right to accelerate the mortgage (which means it becomes immediately due and payable). Have people done land contracts and gotten away with them? Sure, but many others didn't. Your note and mortgage documents spell out the remedies available to FHA and you must decide whether the great risk is worth the reward. One of the questions you might ask yourself is:"Can I afford two house payments, the cost of eviction/foreclosure, the cost of the likely repairs (people who lose their homes often take out a lot of frustration on the home before leaving)?" and that is part of the "good side" because it is assumed here that FHA hasn't yet triggered the "due on sale" clause.

If you are absolutely desperate to get rid of the house, then maybe you can take back a second mortgage for the equity portion of your home, but I wouldn't advise it. Although I hold a few seconds myself, I know how to protect myself and I don't think many folks still in their first home have enough savvy to not lose that equity.

How did you arrive at your asking price for the home and do you have any room to lower it? How about advertising the home with a closing cost credit instead of a price reduction? What does your real estate agent say about average marketing time and how it applies to your situation?


Print the post  


Useful Resources
Our Home Center has all you need to make buying and owning a home a great experience. Get or refinance a mortgage and much more!
Buying/Selling a Home FAQ

Mortgage Professor
Offsite resource for mortgage questions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.