Title Seasoning: a “Big Deal” when it comes to Mortgage Financing

Attention all real estate investors and buyers trying to buy homes from real estate flippers:

Most mortgage lenders now have strict guidelines when it comes to title seasoning. Title seasoning is determined based on how long the seller has been in title to the current property.  If a seller has been on the title of the property for a very short period of time and now is trying to re-sell the property, banks will require the home to be title seasoned.

A lot of people ask why a bank would care.  Well let me try and answer that question.  The mortgage lender cares because not enough time has passed to truly verify that the home value is holding, declining or appreciating.  Mortgage lenders today do not want to take the risk of the unknown so they feel that title seasoning helps protect them from this risk.  Now if you agree or disagree with the mortgage lender, that is not going to change the fact that they are now requiring this as a condition.

Here are some good indicators with mortgage seasoning:

1.  FHA loans do require a 90 day title seasoning.  A purchase contract cannot be written until the title is seasoned beyond the 91st day.  Day 92 is the best time to execute the new contract.

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