Tag Archives: Refinance

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

FHA Cash-Out Refinances

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

FHA Changes Highlights 2009

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

VA Mortgage Cash Out Refinance 100% 411


VA Mortgage Cash Out Refinance 100%

VA Mortgage Cash Out Refinance 100%

VA Mortgage Cash Out Refinance 100%

Veterans’ Benefits Improvement Act of 2008 Changes recently signed by President Bush on 10/10/2008 implement 4 major changes below.

The official Bill Circular is found  HERE

1.)  Mortgage Loans allow Cash Out Refinances to 100% changed from 90%.

2.)  The VA ARMs (Adjustable Rate Mortgages) are good through 2012

3.)  The Temporary Extended Loan Limit Amounts are extended through Dec 31st 2011

4.)  Guaranty of refinances from $36,000 to the same guaranty for purchase deals.

FHA Sweat Equity – Alternative to FHA Down Payment Assistance 411

FHA Sweat Equity

FHA Sweat Equity

Labor performed or materials furnished by borrower before closing may be considered as the equivalent of a cash investment.
Believe it or not FHA Sweat Equity Program has been around forever.  The idea behind Sweat Equity is a way to have the Seller Credit for Purchaser’s Down Payment through Labor or Materials being put forth into the house.
Sweat equity may be gifted subject to both gift requirements and additional requirements. 
  • Existing construction – only the repairs or improvements listed on the appraisal are eligible for sweat equity. Any work completed or materials provided prior to the appraisal are not eligible.
  • Proposed construction – the sales contract must indicate the tasks to be performed by the borrower during construction.
  • Borrower’s labor may be considered as the equivalent of cash if the borrower can demonstrate his/her ability to complete the work in a satisfactory manner.
  • Lender must document the value of the labor through either the appraiser’s estimate or through a cost estimating service. 
  • Delayed work (on-site escrow), clean up, debris removal, and other general maintenance cannot be included as sweat equity.
  • There can be no cash back to the borrower in sweat equity transactions.
  • Sweat equity on a property other than the subject property being purchase is not acceptable. Compensation for work performed on other properties must be in cash and properly documented.
  • Sweat equity credit cannot exceed the estimated cost of the work or the materials.
  • Verification of source of funds used to purchase materials and market value of materials must be provided on any materials furnished by borrower.
  • Paid receipts for the materials should be obtained. 
  1. Buyers to get with the Contractors after an appraisal is done to lend “LABOR” to compensate for “Credit” towards down-payment.
  2. Buyers to paint the house or do some side jobs to help earn “Credit” for the “Labor”
  3. The Sellers will pay for the credit and can raise the sales price in order to compensate for the credit.

FHA Streamline Refinance 411 – The Quick & Easy Loan – No Cost – No Appraisal – Bad Credit OK!

No Cost, No Appraisal, Quick and Easy

No Cost, No Appraisal, Quick and Easy

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

  1. Check to make sure your loan is a FHA loan
  2. Call me to complete a 5 minute application
  3. Sign and Complete disclosure forms to get Payoff from your current company.
  4. Wait 48 hours
  5. Close Loan
  6. That was easy!!

FHA Chapter 7 & 13 Bankruptcy Mortgage 411

Hope is not lost if you filed for Bankruptcy or have been discharged from a Bankruptcy.

FHA Bankruptcy

FHA Bankruptcy

Whats great about FHA loan programs is that they are backed by our Government, Easier to Qualify and help with Less than Perfect Credit borrowers.

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!

[Podcast] Why FHA ARM’s are better than Conventional ARMS

Podcast about why consumers should not be afraid and believe the myth of ARMS.

Not all ARMS are bad and this podcast will explain why FHA ARMS are still a good loan program and why.

Comments welcomed.