I got a letter the other day in the mail stating that my bank was unable to sell my recently acquired FHA loan to the secondary market, therefore, that bank will be servicing the loan. The letter also states that the up front mortgage insurance would be returned to me by being applied to the principal and the monthly insurance premium charge is dropped. This leaves me with a few questions:
1.) Is my loan no longer considered an FHA loan?
2.) If I wanted to get my up front insurance back in cash instead of applied to the principal, is that something that I could ask for? I would much rather put that money into a better investment opportunity.
3.) Are there any legal implications that I should be aware of?
Has anyone else gone through something like this in the past?
A first for me! No, it's not a FHA insured loan, so that should still be open to you later. As for the MIP rebate, they likely have the right to apply it to your principal, within all the documents you submitted. Let us know of any further developments. For whatever reason, it sure seems like a gift.
Thanks Wayne. I plan on calling them tomorrow to ask these questions. I think the reason they couldn't sell it on the secondary market is because permits were not correctly pulled when they converted this house from a single family to a duplex. I think I got really lucky here.
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