FHA Refinance

I had the opportunity to attend a terrific course by the California Association of REALTORS (CAR) in Santa Rosa, California this week on Distressed Properties.  One of the many current topics of discussion of great interest to agents and their clients was refinancing. A little know fact included in the media "rendition" of the FHA program is that, yes, while they will finance a property up to 90% of the current appraised value, the property equity must be shared with the FHA for the entire life of the loan.  If the property is sold or refinanced within one year, they retain 100% of any equity, 2 years is 90%, 3 years is 80% and so on until 50% is reached, which is the lowest "split" percentage. This little known "clause" exemplifies how important it is for our clients to understand all of the details and ramifications of their choices prior to making a decision.