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A Curious User
2 years ago
I obtained an FHA loan from the Federal Housing Administration in 2010 and recently inherited some money from my dad’s estate. It's enough to pay off my mortgage loan and I would like to know what the guidelines are pertaining to any prepayment penalties.
 
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Best Expert Answer
Bruce Reichstein... Answered 88 more questions
a year ago
Yes, you can. HUD explains that a borrower may pre-pay an FHA mortgage in whole or in part an dthat the mortgage lender can't charge a penalty if you decide to do this. You can find this information in HUD 4155-2 (Chapter 3), also called "Lender's Guide to the Single Family Mortgage Insurance Process."

There is a provision for people who obtained their mortgages before 1985 that requires 30 days written notice in order to avoid an extra month's interest. However, few people are still in mortgages that old so it is not likely to apply.
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Jes Osa
a year ago
If there are two people, one is the primary provider with only a tax id # and the other has a SSN but does not work, could they still apply?
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Joe Wallace
a year ago
FHA loan rules in HUD 4000.1 state the following: "(A) General Borrower Eligibility Requirements In order to obtain FHA-insured financing, all Borrowers must meet the eligibility criteria in this section. A party who has a financial interest in the mortgage transaction, such as the seller, builder or real estate agent, may not be a co-Borrower or a Cosigner. Exceptions may be granted when the party with the financial interest is a Family Member. (1) Social Security Number (a) Standard Each Borrower must provide evidence of their valid SSN to the Mortgagee. Exception State and local government agencies, Instrumentalities of Government and HUD-approved Nonprofit organizations are not required to provide an SSN. (b) Required Documentation The Mortgagee must: validate and document an SSN for each Borrower, co-Borrower, or Cosigner on the Mortgage by: --entering the Borrower’s name, date of birth, and SSN in the Borrower/address validation screen through FHAC; and --examining the Borrower’s original pay stubs, W-2 forms, valid tax returns obtained directly from the IRS, or other document relied upon to underwrite the Mortgage; and --resolve any inconsistencies or multiple SSNs for individual Borrowers that are revealed during Mortgage processing and underwriting using a service provider to verify the SSN with the SSA."
Category Expert
Joe Wallace... Answered 279 more questions
a year ago
Current FHA loan policy found in HUD 4000.1 says that the lender cannot penalize the borrower for early payoff. The lender also cannot charge a fee for the following, some of which are related to early payoff. From HUD 4000.1 Part III Section A:

C) Prohibited Fees and Charges

The Mortgagee must not charge the Borrower for the following services:

--costs of telephone calls, telegrams, personal visits with the Borrower, certified mail, or other activities that are normally considered a part of a prudent Mortgagee’s servicing activity;

--Mortgagee’s use of an independent contractor such as a tax service to furnish tax data and information necessary to pay property taxes or make the payments on behalf of the Mortgagee;

--preparing and providing evidence of Payoff, Reconveyance, or termination of the Mortgage;

-- providing information essential to the Payoff;

-- recording the Payoff of the Mortgage in states where recordation is the responsibility of the Mortgagee; or

--fees for services performed by attorneys or trustees who are salaried members of the Mortgagee’s staff.
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Category Expert
Joe Wallace... Answered 279 more questions
a year ago
Current FHA loan policy found in HUD 4000.1 says that the lender cannot penalize the borrower for early payoff. The lender also cannot charge a fee for the following, some of which are related to early payoff. From HUD 4000.1 Part III Section A:

C) Prohibited Fees and Charges

The Mortgagee must not charge the Borrower for the following services:

--costs of telephone calls, telegrams, personal visits with the Borrower, certified
mail, or other activities that are normally considered a part of a prudent
Mortgagee’s servicing activity;

--Mortgagee’s use of an independent contractor such as a tax service to furnish
tax data and information necessary to pay property taxes or make the
payments on behalf of the Mortgagee;

--preparing and providing evidence of Payoff, Reconveyance, or termination of
the Mortgage;

-- providing information essential to the Payoff;

-- recording the Payoff of the Mortgage in states where recordation is the
responsibility of the Mortgagee; or

--fees for services performed by attorneys or trustees who are salaried members of the Mortgagee’s staff.
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Category Expert
Brian Downes
7 months ago
Please take a minute before you pay off your FHA mortgage. I understand that you want to be mortgage free, but there are a number of other very important financial issues to consider.

I would strongly recommend that you speak with reputable financial advisor to create a long term financial plan. FYI - Edelman Financial is an excellent firm with offices throughout the US. Good luck!
Comments:
Cynthia Chavez
4 months ago
Would you care to elaborate? I'm truly interested!
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