"The Seasoning Issue"

"The Seasoning Issue"

I have had some questions as to what "Seasoning" is and will it affect them in a deal. So, here it is, in a "Nut Shell"

"SEASONING": Refers to the Length of time that the Seller has owned the property. Homeowners(home buyers) CANNOT obtain a "Conforming Mortgage" if they are putting less than 20% down and the Seller hasen't owned the property for @ least 90 days.

"CONFORMING MORTGAGE": Loan that complies with ALL the relevant underwriting guidance provided by HUD. Most Low-Income & First Time home buyers obtain FHA, VA, Freddie Mac, Fannie Mae, government backed loans, which are protected by PMI(private mortgage insurance) provided by HUD.

-Seasoning will only be an issue if you are selling to a buyer trying to obtain an FHA MORTGAGE.
-If your WHOLESALING properties, you'll be selling to Investors, Not 1st Time Home Buyers-Seasoning will NOT be an issue. YOUR HERO, SULLY.



Hey Sully

I guess my recent experience proves the issue. I just closed on my first flip yesterday...but it was in serious jeopardy last friday when the buyers title company determined that the deed had not been in my LLC name for 90 days. It was an FHA mortgage and they said we had to wait till the 90 days was up! Everyone in the deal freaked..that meant two more months. The buyers were so motivated that miraculously they obtained a conventional mortgage in one day, and the closing went off as planned. Whew!!!!
So another lesson learned....when you buy a property to flip - switch the deed asap if you intend to!

I'm confused

I understood that seasoning issues normally were attached to refinances where you were trying to take out equity on a home where the value had increased considerably in a short period of time. The original loan would need to be seasoned for a lenght of time before this could be done. Also on resales where the value apparently increased considerably in a short period of time. Some lenders would want the original loan to be seasoned before they would finance for the greater amount. Is this what you are saying, Sully, or do I have it wrong?




Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.

Frank Outlaw

Hey Al

I'm not exactly sure myself, but what you said would apply to my situation, I bought low in June and sold higher in September. But I was told that it is a fairly new rule of FHA loans that the deed can't change names within 90 days of a closing.

The Whole "Seasoning Issue"

came about when REI's were fudging False Appraisal's and doing other Unscrupulous acts, and it's wasen't just the REI's that were involved, were talking; The Appraiser's, The Investor's, AND the Lender, this is the main reason why "SEASONING" became an issue.




you are indeed a hero! what a fountain of information! no matter what the subject, knowledge spews forth from you!

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