As the housing market turns around, one thing has become more common — property “flipping”. If you are someone who is buying a home that was recently bought by an “investor”, you need to be aware that there are rules in place to prevent “flipping” from happening.
Say a house was sold in June of 2009 to an investor for $100,000 by a bank. The investor doesn’t do any work on the home and immediately lists it for $150,000.
Can he do this?
Sure — the real question is can anyone get a mortgage to buy that house.
And the answer is “maybe, but probably not”.
According to HUD guidelines, there is a 90 day anti-flipping rule that says if the house has been owned by the seller for less than 90 days, then it won’t qualify for FHA financing.
Some conventional lenders will lend money on a property that is being flipped – but the property must appraise at value and may still have the value cut.
So the important part of this is this: if you are planning on buying a home that is considered a “flip” then be sure that you know what kinds of problems it could cause with your financing options.
