What is “Flipping a House”? Flipping a house is when someone buys a home, makes repairs then turns around and sells it. Typically this is done in a short amount of time. Most of these homes are back for sale with in 60-90 days. If a person is obtaining a mortgage to buy a “flipped home” there are some additional rules that need to be followed.
FHA rules are slightly different than Conventional rules. Generally for FHA, if the home is sold within the first 90 days and the new sales price is over 20% higher than what the purchase price was 2 additional items must happen. 1.There must be 2 appraisals done to confirm the value of the new sales price 2.a full home inspection must be ordered by the lender to confirm the condition of the property. For Conventional financing, it could be required by a lender if the home is being flipped within 6 months for some lenders or 12 months for others.
A lender will find out if a property has been flipped once they have received the chain of title on the property. It lists all of the owners of the property for the last 20 years.
Neither the 2nd appraisal or the home inspection ordered by the lender can be paid for by the borrower. Both of these items will verify that the seller has in fact made good repairs and is selling the home for a reasonable price.
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