The rules for FHA home loans regarding closing dates and related details are found in HUD 415.2 (at the time of this writing) in Chapter Six under the heading, General Loan Closing Requirements. There are a few items in this section that should be noted in case FHA borrowers have questions–including the basic definition of a closing date as described in the rulebook:
“The date of closing/settlement is generally considered the date on which the note and mortgage are signed by the borrower. This is also the date defined
as the settlement date on the HUD-1 Settlement Statement. However, the 60-day endorsement submission clock begins on the date that the lender relinquishes control of the loan proceeds (disburses the mortgage funds), for both purchase money mortgages and refinance transactions.”
FHA loan rules in this section also address per diem interest costs–something that can be an issue for borrowers who don’t close at the end of the calendar month:
“The lender may collect interim or per diem interest from the date it disburses, or relinquishes control of the loan proceeds. Interim interest for the period preceding amortization must be computed using a daily factor of 1/365th of the annual rate.”
“On the purchase of a primary residence, the lender may credit up to seven calendar days of per diem interest to the borrower and have the mortgage payments begin the first day of the succeeding month. This reduces the burden on borrowers whose loans were scheduled to close at the end of the month, but did not, due to unforeseen circumstances.”
FHA loan rules also address per diem interest on refinance loans, stating in Chapter Six, “On a refinance, the lender and borrower may agree to a per diem interest credit of up to 30 calendar days (up to the day prior to the first payment date) and have the mortgage payment begin the first day of the succeeding month.”
FHA loan rules are quick to point out in this section that a per diem interest credit to the borrower cannot result in cash back on the transaction. FHA single family home loans for new purchases and non-cash out loans (including FHA Streamline loans) generally must not result in cash back to the borrower unless a legitimate refund is due.
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