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Kathy Green
8 months ago
We are trying to purchase a lower priced home (50-60,000) In this hot seller's market we are beat out again and again over the last 3 years. We can pay cash to be more competitive but we can leave our cash in the house?

My husband is in a wheelchair and we need a good deal of that cash to make the necessary changes to needed for him. Can we purchase with our cash, and how soon after can we put a loan on the house to get our cash back out? How much will we be able to pull out? Someone please explain the formula (how the numbers work) and the time frame involved, if that is possible to do.
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Best Expert Answer
Joe Wallace
8 months ago
FHA loan amounts are calculated based on the sale price of the home or its' appraised value, whichever is lower. In general, FHA forward mortgages do not permit cash back to the borrower except for bona fide refunds for money that was paid up front but later financed into the mortgage loan.

However--borrowers may, depending on circumstances, be able to pull equity out of a home using an FHA refinance loan-FHA loan rules in HUD 4000.1 state of FHA refinance loans, "A refinance transaction is used to pay off the existing debt or to withdraw equity from the Property with the proceeds of a new Mortgage for a Borrower with legal title to the subject Property." Ask a participating lender about an FHA refinance loan option instead of a forward mortgage if you are buying the home outright in cash. You may also consider applying for an FHA 203 rehab loan that includes additional funds for upgrades/improvements to the home in addition to the purchase or refinance loan amount. Hope this helps!
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