Owner finance- refi

4 Replies

Just a quick question I was hoping someone could answer. I cant seem to find the answer without contacting a loan officer. 

Im a few months into a owner financed single family home here in Oregon. We will hold this home, and want to buy one more buy and hold this year. 

Do I lose my FHA option as soon as I refinance this owner finance? My initial thought was as long as I kept finance private through the owner I would still have my conventional FHA in my back pocket.

My plan was to stick with owner finance, while applying and obtaining the FHA property then after both properties are active, I refi the old owner finance... Maybe this was plan was a dream, or is this possible??

Marc- Salem, OR

Your FHA option is only available to you with your primary residence. Once you buy a second home for an investment, you'll have to use a conventional loan. If you keep the owner financing on your first property, the only way to use your FHA on the next is to move into it.

If you refinance the current owner financed property into a conventional loan, your FHA benefits will still be active yes. Again as long as you're using it on your primary residence.

Robert is correct.....additionally, you must disclose the owner financed mortgage on any future mortgage application, otherwise that could be mortgage fraud, so there is no way to have other options available as if you didn't have that loan.

Robert is correct with respect to straight FHA, but FHA also has first time homebuyer programs, you won't be eligible for some programs unless you have not owned a property for more than 3 years.

Even as a borrower under a seller financed loan, you should be aware of the Dodd-Frank requirements for your loan being an owner occupied residence.

One more "should do" use a loan servicer. If that note holder fails to deposit a check in a timely manner, say he forgets to deposit it for 2 weeks, he can give you a late payment on a mortgage which can keep you from obtaining a new mortgage for a year. It's not the date the check is written but the day it is deposited and cleared as to when the payment was made. Good luck :)

Originally posted by @Robert Sepulveda :

Your FHA option is only available to you with your primary residence. Once you buy a second home for an investment, you'll have to use a conventional loan. If you keep the owner financing on your first property, the only way to use your FHA on the next is to move into it.

If you refinance the current owner financed property into a conventional loan, your FHA benefits will still be active yes. Again as long as you're using it on your primary residence.

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Robert

I apologize, I didn't make it clear that I will be occupying the FHA for a year, if I was to get the loan. I will absolutely follow the regulations. Thanks for your clear answer.

Originally posted by @Bill Gulley :

Robert is correct.....additionally, you must disclose the owner financed mortgage on any future mortgage application, otherwise that could be mortgage fraud, so there is no way to have other options available as if you didn't have that loan.

Robert is correct with respect to straight FHA, but FHA also has first time homebuyer programs, you won't be eligible for some programs unless you have not owned a property for more than 3 years.

Even as a borrower under a seller financed loan, you should be aware of the Dodd-Frank requirements for your loan being an owner occupied residence.

One more "should do" use a loan servicer. If that note holder fails to deposit a check in a timely manner, say he forgets to deposit it for 2 weeks, he can give you a late payment on a mortgage which can keep you from obtaining a new mortgage for a year. It's not the date the check is written but the day it is deposited and cleared as to when the payment was made. Good luck :)

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Thanks Bill

I do have a servicer that was a great point to add.  I will continue to study the D Frank requirements. 

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