Can You Refinance a HUD 232 or HUD 232/223f Loan?
If you own a senior living facility with a loan insured under the HUD 232 or HUD 232/223f programs, you can refinance that loan under the 232/223(a)(7) refinancing program. Borrowers can refinancing more than one HUD-insured loan on the same property with one 23
232/223(a)(7) Refinancing for HUD 232 and HUD 232/223(f) Loans
If you own a senior living facility with a loan insured under the HUD 232 or HUD 232/223(f) programs, you can refinance that loan under the 232/223(a)(7) refinancing program. Borrowers can refinance more than one HUD-insured loan on the same property with one 232/223(a)(7) loan, though the entire loan amount cannot exceed the Maximum Insurable Loan Calculation (MILC).
What are the Terms for 232/223(a)(7) Refinance Loans?
232/223(a)(7) refinances have a minimum term of 10 years. In most cases, the term of the 232/223(a)(7) refinance loan will not be longer than the remaining term of the original loan. When refinancing multiple FHA loans, the larger or primary loan determines the term of the refinance loan.
Can You Get an Extension on a 232/223(a)(7) Refinance Loan?
In some cases, the Office of Residential Care Facilities (OCRF) allows a 232/223(a)(7) extension beyond the term of the original loan. The new loan term cannot be any longer than "the remaining term of the original loan plus 12 years." The new loan also cannot be longer than the statutory term limit of the original loan (usually 40 years), and cannot be longer than the term of the original loan when it was issued. For example, if a 30-year HUD 232 loan is getting refinanced, the new loan cannot have a term longer than 30 years.
To learn more about FHA 232 loans, fill out the form below to speak to a HUD/FHA loan expert.
Related Questions
What are the benefits of refinancing a HUD 232 loan?
Refinancing a HUD 232 loan can provide a variety of benefits, including:
- Streamlined processing; loans can close in as few as 60 days
- Less paperwork and fewer reports required
- Loans are fully assumable (with FHA/HUD approval)
- Allows term increase of up to 12 years
- Non-recourse
- Fixed-rate
In addition, borrowers can roll the the costs of any prepayment penalties into the loan itself.
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What are the requirements for refinancing a HUD 232 loan?
The requirements for refinancing a HUD 232 loan include meeting specific eligibility guidelines, additional seasoning requirements, and insurance requirements. Depending on the mortgage amount and HUD-insured LTV (loan-to-value ratio), equity take-out loans could be eligible for immediate refinancing. Insurance requirements for HUD 232 financing are outlined in Chapter 14 of the Healthcare Mortgage Insurance Program Handbook (4232.1). Refinancing a HUD 232 or HUD 232/223f loan requires a minimum term of 10 years, and in most cases, the term of the 232/223(a)(7) refinance loan will not be longer than the remaining term of the original loan. When refinancing multiple FHA loans, the larger or primary loan determines the term of the refinance loan.
www.hud232.loan/terms-qualifications-and-guidelines
www.hud232.loan/insurance-requirements
www.hud232.loan/hud-232-faqs/refinancing-hud-232-loans
What are the advantages of refinancing a HUD 232/223f loan?
The advantages of refinancing a HUD 232/223f loan include:
- Allows term increase of up to 12 years
- Streamlined processing; loans can close in as few as 60 days
- Less paperwork and fewer reports required
- Loans are fully assumable (with FHA/HUD approval)
- HUD 232/223(a)(7) loans are non-recourse
What are the steps involved in refinancing a HUD 232 loan?
The steps involved in refinancing a HUD 232 loan include:
- Submitting an application to the FHA/HUD for approval.
- Providing a project capital needs assessment (PCNA) report.
- Paying an FHA application fee of 0.30% of the loan amount.
- Paying an initial, one-time MIP (mortgage insurance premium) fee.
- Paying additional MIP each month.
The loan term for a 232/223(a)(7) refinance loan is a minimum of 10 years and in most cases, the term of the 232/223(a)(7) refinance loan will not be longer than the remaining term of the original loan. When refinancing multiple FHA loans, the larger or primary loan determines the term of the refinance loan.
For more information, please visit www.hud232.loan/hud-232-faqs/refinancing-hud-232-loans and apartment.loans/hud-232-223-a-7-refinancing-loans.
What are the risks associated with refinancing a HUD 232 loan?
The risks associated with refinancing a HUD 232 loan include:
- Significant upfront costs
- Higher fees than conventional loans
- Longer application process (minimum of 120 days)
- Mortgage Insurance Premiums (MIP) both initially and as an annual premium
- HUD property inspections are required
- Annual audited operating statements are required
- Replacement reserve escrows
- Restrictions on owner distribution and cash out