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.
Mortgagee Letter 08-40 communicates changes to FHA refinance transactions and are effective January 1st, 2009. Although this update includes guidelines that have not changed, I have listed the unchanged ones anyway as a review for those of you already familiar with FHA guides.
Here are the 10 things you need to know about these changes:
1. The maximum Loan To Value for rate & term refinances (including streamlines WITH an appraisal) is 97.75%*
2. The maximum Loan To Value for cash-out refinances is 95%* for loan amounts less than the conforming limit and 85%* for loan amounts at or above the conforming limit. (Must have 12 months seasoning and no 30 day late payments)
3. Two appraisals will be required for all cash-out refinances with an LTV above 85%.
4. The mortgage must be current for the month due.
5. New or current 2nd mortgages are eligible with no maximum CLTV.
6. Loan amount for streamline refinances WITHOUT an appraisal cannot exceed the original loan amount.
7. UFMIP rates: 1.75% for all rate & term and cash-out refinances AND 1.5% for all streamline refinances.
8. The FHA Secure refinance will be terminated.
9. Refi loan amount CAN include: Closing costs, discount points, current interest, prepayment penalties, prepaids, late charges, and escrow shortages.
10. Cash back on rate & term and streamline refinances CANNOT exceed $500.
FHA Streamline Refinance 411 – The Quick & Easy Loan – No Cost – No Appraisal
FHA Streamline 411: FHA has permitted streamline refinances on insured mortgages since the early 1980’s. This is a way to “Gurantee Refinance” regardless of certain requirements. This is an excellent choice if you want to ..
1.) Convert your ARM to a FIX regardless of past credit and upside appraisal issues.
2.) Refinance to a lower rate, quick and easy without the headache of new loan process.
FHA Streamline Requirements:
The mortgage to be refinanced must already be FHA insured.
The mortgage to be refinanced should be current (past late payments OK)
No Fico Score Required
Must lower the borrower’s monthly principal and interest payments to qualify.
No Cash out over $500 on refinance.
No termite report is required
Appraisal not required
Income documents not required
FHA Streamline Process: The Streamline process is by far the most Fastest and Easiest to qualify. Heres how it works
Check to make sure your loan is a FHA loan
Call me to complete a 5 minute application
Sign and Complete disclosure forms to get Payoff from your current company.
FHA understands that nobody is perfect and realizes that filing for Bankruptcy does not mean your not applicable for credit. FHA reviews all credit applicants based on your repaying profile and background. Even though you may have had hiccups in the past as long as you are able to re-establish a track history of paid on time agreements or even document an isolated time frame that resulted in excruciating circumstance.
With that being said what can you do with borrowers who filed for Bankruptcy? Take a look below…
Chapter 13 Bankruptcy 411
Must have paid on time with the Bankruptcy for 12 complete months.
Must obtain permission for the courts to refinance or purchase a home. Must have trustee sign off and finally the Judge to sign off final approval. Typically the Trustee charges $500 added to the HUD statement at closing to deliver this permission for the courts.
Must establish 2-4 paid as agreed tradelines other than the bankruptcy.
Must write a letter of explanation why you filed bankruptcy and what steps have you done to correct your credit default.
Chapter 7 Bankruptcy 411
24 months must pass from the time of Discharge Date of the borrower/spouse in order to apply for a FHA loan.
Must establish 2-4 paid as agreed trade lines other than the bankruptcy.
Must write a letter of explanation why you filed bankruptcy and what steps have you done to correct your credit default.
If you have any questions or comments please feel free to respond!
