No more extra charges on interest payments under FHA mortgages

The FHA has allowed for a long time lenders to charge borrowers a full month of interest when they sell or refinance a home regardless from the closing date. untitled

However, Thanks to a policy switch that was recently made final, charging extra interest payments on loans insured by the Federal Housing Administration will soon be banned.

The FHA has served as a major source of financing for moderate-income first-time buyers allowed lenders to charge borrowers a full month of interest when they sell or refinance a home.

New FHA mortgages will require lenders now to collect interest only on the balance remaining on the date of closing for a home sale or refinancing.

Under the revised policy, if you’re selling your home and you have a balance left on your FHA loan, the lender will have to stop charging you interest on the date of the closing, not compute the interest charges that would be due through the end of the month and roll them into your bottom line.

These changes will make the FHAnow more attractive to borrowers and remain as the go-to choice if you have as low as 3.5 percent down payment on a purchase of a home.

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