FHA PREPAYMENT PENALTY MAY BE NO LONGER
Penalty is perhaps the most awful word to hear as a homeowner who pays a loan off before the end of the month. However, by next year, FHA prepayment penalties may be no longer. It’s been a work in progress with the NAR fighting for relief in this area. Ultimately the removal will relieve borrowers of being hit with a significant financial burden that’s fully out their control.
Should a closing have been delayed or not available except for in the middle of a month, say the 15th, the FHA Payment Penalty will issue a penalty for the remaining 15 days. This could result in hundreds of dollars in interest payments. End of the month closings are not always easy to schedule and with FHA loans being a popular choice for homeowners, it is likely that a great number of consumers have been experiencing this financial hit.
The NAR certainly deserves all the praise for this great victory as they have been the advocates for eliminating the penalty over several years. It seems strangely unfair that FHA loans were allowed to carry such a penalty while it was unacceptable for VA, Freddie Mac & Fannies Mae. This will align the mortgage industry and allow a stream lined compliance.
It’s great news for the real estate market and it comes at a great time with pending homes sales up 3.33% in July of 2014. The predictions are for continued increased home sales and with the release of this penalty in January of 2105, the real estate world is looking very good.