FHA Cash Out then Sell Home

[Kasuito39]

I've over 100k of equity on primary home and would like to FHA Cash Out refi next month and thereafter, sell home in a month or two. Are there any restrictions? Also, i'm planning to use the cash out proceeds as down payment for a new home using FHA 3.5% around Feb 2020 or earlier. Any suggestions on this strategy? Thank you.

[Kasuito39]

I forgot to mention my lender will not charge any closing costs whatsoever for the cash out refi.

[JVille]

Is your property currently listed or has been listed in the last 12 months? Can you qualify for both mortgages, still own one home and buy another before the other sells.

[chiefone4u]

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@Kasuito39 wrote:
I forgot to mention my lender will not charge any closing costs whatsoever for the cash out refi.

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Might want to double check the fine print on your planned loan. Several of them I've looked at say something along the lines of "if paid in full before 36 months, borrower will be required to repay lenders closing costs".

I'm not sure there is a hard set rule, but some banks require you to live in the home and / or make "x" amount of payments to qualify. 

I would talk to your loan officer that is offering this cash out refi about your plans to make sure it doesn't bite you when you least expect it. 

[homeloanexpert]

Unless you are dealing with a lender who services 100% of their portfolio, there is a good chance your Loan Officer will not be happy. You see, many of us lenders sell some of our loans we fund shortly after we close. If you sell your home there is a good chance that LO will have a Early Payoff hit. Meaning if you sell or default in the first 6 months, the funding lender will most likely have a pay all the funds they earned for the yield spread/servicing transfer which could feasible be thousands. I will run it by your LO.

[Kasuito39]

@JVille No my property has not been listed in the last 12 months and cannot qualify for both homes. Currently have a conventional loan that was IIB 7.

[dragontears]

Isn't there rules against having multiple FHA loans?

If your dti can't support both loans I would assume you would put offers in on a new place with contingency of selling your old one instead of trying to do a cash out refi for the down payment since you wouldn't be approved for a new loan without selling your current place (due to dti issues).