Guideline Change – FHA Refinances Cashout Require Two Appraisals now in 2009 over 85% LTV

FHA Refinances Cashout Require Two Appraisals now in 2009 over 85% LTV

Starting January 1st 2009 , Loans with FHA case numbers assigned on or after will require a Second Appraisal to be done for cash-out refinances greater than 85% LTV.

If you are refinancing two mortgages into one then its considered a Cash-out.  The only exception is when the 2nd mortgage was used as a purchase and not as a cash out or HELOC.

Reverse Mortgages are the only exception to this guideline change.

Below are highlights to the changes.

• A 2nd appraisal is required regardless of loan amount or property location.
• The 2nd appraisal must be still be completed by a FHA approved appraiser.
• If 2nd appraisal is lower than 5% of 1st appraisal, the maximum mortgage amount will be based on the lowest appraisal.
• This does not change the current requirement for two appraisals on loans greater than $417,000 and LTV greater than 95%.

Please consult with a mortgage expert regarding these changes.