Q&A: What happens to an FHA loan when you move from a house to an apartment?

Posted on Aug 6, 2012 in FHA Information

Question by Anna B: How do I check daily FHA mortgage rates?
My lender hasn’t locked rate for home purchase in CA. How do I check rates myself looking at internet. he says we will be able to lock once we get loan docks this week. I just want to see what kind of rate I’m looking at (ballpark)

Best answer:

Answer by Toni
Bankrate.com
The site has been around for a decade – you can trust it…

What do you think? Answer below!

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Castle Rock
castle
Image by Matija Grguric
Outpost fortress in the middle of the ocean. Ideal location for princess to hide when her kingdom is in danger. Or perhaps not? While she is making her hair and enjoying the Sun, case her guards are not as cautious as they should be. While they are enjoying their lunch and drinking, for sale a bunch of orcs are trying to climb up to the castle living qurters.

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Castle Rock
castle
Image by Matija Grguric
Outpost fortress in the middle of the ocean. Best spot for princess to hide when her kingdom is in danger. Or possibly not? While she is producing her hair and enjoying the Sun, health her guards are not as cautious as they really should be. Although they are enjoying their lunch and drinking, a bunch of orcs are trying to climb up to the castle living qurters.

This was my castle entry for Classic Castle Colossal Contest VI 2008.

If you would like to see more homes click here…
Question by thecoolmacdude: What happens to an FHA loan when you move from a house to an apartment?
What happens to an FHA loan when you move from a house to an apartment? Can you get out of your FHA loan and get the value you’ve put into it (principal) out? How does this work? Sorry, sildenafil I’m new to this whole loan process. 🙂
I am not foreclosing. I am currently in an FHA loan, and am refinancing for a lower monthly payment (with closing costs paid by the bank). I just wondered what would happen if in a few years if I decided to downgrade.

Best answer:

Answer by Frank
Here’s the simple version: Don’t buy a house unless you will live in it for at least 5 years.

Here’s the slightly longer version: Get some help from someone who can talk to you directly, because you so completely misunderstand the purchasing process that I’m very concerned that you are going to end up in a bad situation with your purchase.

Here’s the much longer version: Let’s say you buy a house for $ 100,000. That’s 100k. (k=thousand). Your closing costs will be about 5k. Those are the costs to buy the house. (Lawyer, inspector, etc.) So you need to pay 105k to buy the house. You put down 10k down payment. You get a loan for 95k. (95+10 = 105)

Over the next 5 years, you pay your monthly mortgage bill. Most of this money goes toward paying interest on the loan, so your loan balance (the amount you owe) doesn’t decrease much. So after 5 years, you owe about 90k.

You decide you want to live in an apartment. You sell the house for 100k. About 8k goes to the realtor and for closing costs. So you get 92k (100-8=92).
The bank takes 90k to pay off the loan, leaving you with 2k. Two thousand dollars.

Did I mention that during those 5 years, you are paying for all repairs to the house out of your own pocket?

Let’s say you don’t keep the house up so well. You sell the house for 95k. 8k to realtor and closing costs, leaving 87k (95-8=87)

The bank takes that money and wants an extra 3 thousand from you to close the loan, or they won’t let the deal go through. You owe 90k, and with 87k net from the sale, that leave 3k for you to pay.

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5avg.rating 13 votes.

3 Comments

  1. Your question is missing a lot of information.
    An FHA loan is for the purchase of a home.

    If you don’t live there but plan to keep the home (you can’t rent an FHA loan), you would need to continue paying the loan. Otherwise, you would need to sell the home and pay off the loan. If that is not done the lender will foreclose on you.

  2. As with any loan, when you sell your house you pay off the loan with the proceeds of the sale and you get to keep whatever is left over. If (as happens a bit these days) the loan is more than the proceeds then you either have to pay the difference out of your own pocket, or get the bank to agree to waive the difference which they hate to do (as in a short sale). FHA is no different from other loans in this regard.

  3. You can’t “get out” of your loan and just walk away and expect them to mail you a check for your equity . If you walk away, the bank will foreclose, which requires attorney fees that are generally assessed back to you or against any value you have in the property. When you walk away, you walk away from everything, including any value/principal in the property.