Many sellers with FHA loans are not aware that payoff of an FHA loan requires them to pay a full month's interest--even if the sale of their house closes and funds near the first of the month.
Suppose a seller has been in their home about 5 years and has an FHA loan. Suppose also that the remaining principal balance on the seller's loan is about $182,474, the interest rate is 6%, and that there are 29 days remaining in the month after closing. At closing, the seller will pay interest through the end of the month amounting to $853.51! Yes, this is a big deal!
I support the efforts of the National Association of Realtors® to get the U.S. Department of Housing and Urban Development to eliminate interest charges imposed after borrowers pay off loans insured by the Federal Housing Administration.