Question about title seasoning

[Wade G.]

Seasoning has me confused. I purchased a property with hard money and then refinanced into a 30 year loan a month later. My loan officer has said a property must be held for six months before it can be sold. Title company I closed with says I can sell at anytime to a cash buyer but have to wait 3 months to an FHA buyer. I purchased this property with the intent to rent it out but it is looking more and more like selling it may be a better option. Also, does the time period begin when I purchased with the HM loan or the date it was refinanced?

[Chris Mason]

Originally posted by @Wade G.:

Seasoning has me confused. I purchased a property with hard money and then refinanced into a 30 year loan a month later. My loan officer has said a property must be held for six months before it can be sold. Title company I closed with says I can sell at anytime to a cash buyer but have to wait 3 months to an FHA buyer. I purchased this property with the intent to rent it out but it is looking more and more like selling it may be a better option. Also, does the time period begin when I purchased with the HM loan or the date it was refinanced?

 Both are wrong, actually, with elements that are correct.

- Prepayment or early payoff penalties for consumers are a thing of the past for your vanilla conforming FNMA type loans. However, early payoff penalties for loan originators are certainly a thing. You'd be screwing over the person that helped you refinance, that would be her or his 'thanks' for helping you drop from the 12% HML interest rate to whatever she or he got you. If you want to keep your karma on balance, call the LO if the sale closes <6 months from the refinance, and ask them how much they were penalized and make them whole out of that sweet sweet profit. If LO is smart, not only will they not hold it against you, but a light bulb will go off over their heads when they realize you once again have down payment funds. :P

- A buyer using an FHA loan would have to follow the FHA's anti-flipping rules, which may or may not apply to your property depending on how much more you are looking to sell it for compared to what you bought it for. Before 3 months (this one measured from your purchase date, not the refi date) it's super hard, 3 to 6 months less hard, after 6 barely hard, 12 months and you're in the clear. However there's no rule that says your listing agent should only market it to FHA buyers, in fact that would be rather unusual. The title company rep knows the FHA anti-flip rule jammed up some escrow of hers or his, but no reason they'd know the nitty gritty details.