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.
Reminder: FHA Changes Effective Jan 1st 2009 Highlights
- Maximum LTV Financing: The required cash down payment will be 3.5% of the appraised value or the sales price (whichever is less). Closing costs may not be used to meet the minimum 3.5% cash down payment requirement.
- Maximum base mortgage amount: For purchase loans, the maximum base mortgage loan amount will be 96.5% of the appraised value or the sales price (whichever is less). (Upfront Mortgage Insurance Premiums (UFMIP) may still be financed in the loan)
- Maximum refinance LTV amount*: the maximum refinance LTV will be 97.75% of the appraised value. This LTV will replace the High-Cost/Low-Cost Factors in the maximum loan calculations.
Note: although a Mortgagee Letter has not been published as of the deadline for this article, the FHA previously indicated that 97.75% LTV will be published and effective on Jan 1, 2009. Any other changes announced in the Mortgagee Letter will be analyzed and communicated as soon as possible.
Note:At this time, the revised LTV does not impact: 203(h) for disaster victims & HUD 184 for Native American loans
Posted in 1st Time Home Buyer, FHA, Mortgage, News, Tips
Tagged 2009, Changes, FHA, Guidelines, LTV, Mortgage, Purchase, Refinance