813.910.8020 Apply Now

Mortgage Broker Tampa, FL | Mortgage Lender Tampa Florida | Marimark Mortgage

  • Home
  • Homebuyers
  • Homeowners
  • Realtors
  • Investors
  • About Marimark
  • Contact Us
  • Mortgages
  • Apply Now
  • Current Mortgage Rates
  • Calculators
  • Testimonials
  • Blog
  • Videos
  • Featured In
Home / Blog / Property Flips / Property Flips: Do you need to wait to buy or sell a property that was recently purchased?

Property Flips: Do you need to wait to buy or sell a property that was recently purchased?

May 8, 2014 By Mary Catchur

Property Flips and Home Loans
Photo Credit: Sean Dreilinger/Flickr/CC.

With the real estate market making a comeback and investors getting back in the market, we are beginning to see more borrowers buying homes which have been purchased and renovated by investors and being put back on the market within a few months of being purchased. So – how does that affect the borrower and seller?

How do property flips affect the borrower and seller when put back on the market?

The answer depends in part on how long since the property was purchased by the seller and how much the value has increased. As many borrowers are using FHA loan programs to qualify for purchasing these homes, we will address those guidelines first.

FHA Anti-Flipping Rule

FHA refers to these as “property flips.” In 2003, FHA published the “anti-flipping rule.” Under this rule the FHA would not insure loans for properties that had been purchased within the last 90 days. In 2010, FHA suspended the rule for two years in an attempt to facilitate the sale of some of the excess homes on the market. The suspension was subsequently further extended through December 2014.

The current rule is generally as follows.  If a property has been purchased within the last 90 days and is being resold at a 20% increase in value over the previous purchase, the lender will require that a second appraisal be performed.  If the property has been purchased greater than 90 days but less than 180 days from the current sale and the value has increased by more than 100%, once again a second appraisal will be required by the lender.

The good news for the buyer is that FHA prohibits charging the buyer for the second appraisal, so it will typically be paid for by the seller.  In addition the lender may request to see documentation of the work that went into the home to justify significant increases in value in such a short period of time.

The investor/seller would be wise to take pictures of the home before and after the renovation and maintain detailed records of expenditures made to improve the home.  This will facilitate the loan process and provide further assurance to the underwriter that the value increase is justified.

The rule also requires that there is not a relationship or “identity of interest” between the buyer and seller of the property.

Property Flipping Rules for Conventional Mortgages

While these rules apply specifically to home being purchased with an FHA loan, there are also similar rules in effect for borrowers purchasing with a conventional mortgage. Under the conventional loan programs, the underwriter will also be concerned with evaluating any significant increases in value of a property that was recently purchased and may also require a second appraisal. These rules vary by lender and also allow for more underwriter discretion.

2015 Update: FHA Announces Expiration of the Property Flipping Waiver

For information about the expiration of the FHA Flipping Wavier, see our article: FHA Announces Expiration of the Property Flipping Waiver.

Opt In Image
Stay Informed, It's Your Money
Marimark Mortgage Newsletter

The Marimark Mortgage Newsletter will keep you informed with important events in the mortgage industry that could impact your finances.

We especially focus on ways to save money on your current and future mortgages. And, we continually share the information we share with our clients, because we believe informed consumers are the best consumers.

Real estate agents, and other professionals in the industry, will receive an ongoing wealth of information that will help them serve their clients.

Thank you for signing up!

Filed Under: Property Flips Tagged With: Conventional Home Loan, FHA, Property Flips

Opinions, estimates, forecasts and other views contained in this page do not necessarily represent the views of Marimark Mortgage or its management and should not be construed as an offer to provide financing at the rates or terms mentioned. Due to market fluctuations, interest rates are subject to change at any time and without notice. Interest rates are also subject to credit and property approval. Although Marimark Mortgage attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. Information from this page may be used with proper attribution.

Save with a Mortgage from Marimark

Whether you are buying a home or refinancing, you can save with a mortgage from Marimark Mortgage!

    Search

    Post Categories

    Testimonials

    Refinancing with Mary an absolute pleasure

     
    Refinancing with Mary has been an absolute pleasure. I have never been through the process before and she took the time to explain each step. She was prompt (had a rate locked in right away) and most importantly always answered the phone or emails almost immediately! The communication line alone made the refinancing process every bit worth it. Would recommend to anyone, and will be back for any future purchases! Bret Brennan, March 2021
    See More Reviews
    Marimark Mortgage LLC
    5327 Primrose Lake Circle
    Tampa, FL 33647-1328
    (813) 910-8020
    (866) 910-8020

    Accessibility
    Privacy Policy
    Terms of Service
    Sitemap

    Reviews

    Website Testimonials
    Google Reviews
    Zillow Reviews
    Trulia Reviews
    Facebook Reviews
    Yelp Reviews
    BBB A+ Rating

    FOLLOW US

    • ‎
    • ‎
    • ‎
    • ‎
    • ‎
    • ‎
    Marimark Mortgage is a BBB A+ Accredited Business

    Recent Posts

    • FHA Announced a 30-Basis Point Reduction to Annual Mortgage Insurance Premiums
    • How Can You Improve Your Credit Score?
    • Historical Mortgage Rates From The 1970s
    • What You Need to Know About Mortgage Forbearance
    • Top Tips to Save Money for a Down Payment

    © 2023 Marimark Mortgage, LLC All Rights Reserved. | Internet Marketing by Image Building Media. | RSS Feed

    Reviews / Recommendations: Google, Zillow, Trulia, LinkedIn, Facebook, Yelp, BBB

    Licensed in Florida by the Office of Financial Regulation, Mortgage Lender License #MLD77.
    Licensed in Virginia by the Virginia State Corporation Commission, License MC#4556.
    Licensed in Pennsylvania by the Department of Banking and Securities, License #40222.
    NMLS#248318 – www.nmlsconsumeraccess.org.