LA MORTGAGE SERVICES

 

 

FHA REFINANCE

 

FHA Refinance loans are used to refinance any non FHA loan to an FHA loan. If a borrower has conventional mortgage they may be able to use the FHA refinance loan to refinance up to a LTV of 95% provide that they are not getting any money at closing or paying off anything other than the existing mortgage.

FHA Cash Out Refinances

FHA Cash-out refinances loans on properties owned more than one year prior to the refinance are permitted on owner occupied principal residences only, and are limited to 85% of the appraised value plus the allowable closing costs.

An FHA cash-out refinance loan is when a borrower refinances their current mortgage for more than they owe in order to pull out the built up equity that has accrued in the home. The amount a home owner can borrower is limited by the value of the property compared to the loan amount (otherwise known as the loan-to-value or LTV). 

The following are basic requirements of a cash-out FHA refinance home loan:

The subject property must have been owned by the borrower as his or her principal residence for at least 12 months preceding the date of the loan application.

If said property is encumbered by a mortgage, the borrower must have made all of his/her mortgage payments within the month due for the previous 12 months, i.e., no payment may have been more than 30 days late and is current for the month due. 

Applies to owner occupied properties only

The property that is security for the refinanced mortgage must be a 1- or 2-unit dwelling.

Loan amounts may not exceed the maximum loan limits for the area.

 Subordinate financing may remain in place, but subordinate to the FHA insured first mortgage, regardless of the total indebtedness or combined loan-to-value ratio, provided the homeowner qualifies for making scheduled payments on all liens.

 All borrowers must credit qualify.

 Any co-borrower or co-signer being added to the note must be an occupant of the property. Non-occupant owners may not be added in order to meet FHA's credit underwriting guidelines for the mortgage. 

 If a homeowner is pursuing a cash-out refinance and the loan balance exclusive of FHA upfront mortgage insurance premium will exceed $417,000, the loan-to-value may not exceed 85 percent of the appraiser estimate of value.