Payoff your FHA loan on the first of the month

 Loan Programs, Owner-occupied, Residential Mortgage  Comments Off on Payoff your FHA loan on the first of the month
Oct 222014

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By G. Steven Bray

For those with an FHA mortgage, an unpleasant surprise may await when you sell your home. FHA charges interest one month at a time. That means even if the sale closes on the 15th of the month, FHA calculates the mortgage payoff through the end of the month. For a $200,000 loan balance, Uncle Sam is going to dip his hand into your pocket for another $400.

This practice runs contrary to that for VA and USDA loans and for conventional mortgages. When the Consumer Financial Protection Bureau released its Qualified Mortgage rule, it labeled the practice a pre-payment penalty and instructed FHA to do away with it. FHA finally is going to end the practice next year. For all loans closed after Jan 21st, the payoff will include only interest through the funding date.