| FHA Refinance Loans |
5) 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.
6) Any co-borrower or co-signer being added to the note must be an
occupant of the property.
7) If the loan is scored through FHA TOTAL Scorecard and received an
“Accept/Approve” recommendation, but there are one or more 30-day late
payments on the first mortgage in the past 12 months, then the loan is not
eligible for 95% LTV cash out.
b. 85% Loan-To-Value:
1) The loan is limited to a combined LTV (FHA insured first mortgage and any
subordinated lien) of 85% of the appraised value provided the borrower has
owned the property for at least one year.
2) The property that is security for the refinanced mortgage may be a 1-4 unit
property.
3) Property must be owner-occupied. If the property was purchased less than
one year preceding the final application, the mortgage amount must be calculated
using the lesser of the appraised value or the original sales price of the property
multiplied by 85%.
4) Properties that are owned free and clear may be refinanced as cash-out
transactions.
5) Properties acquired by inheritances within the past 12 months are eligible
for a cash-out refinance transaction limited to 85% of the appraised value.
The lender must document the acquisition by the borrowers via inheritance.
2. “No Cash-Out” Refinances (non-streamlined): The maximum
mortgage is based on the lesser of the two calculations below:
a. “Maximum loan-to-value percentages” multiplied by the appraised value,
exclusive of closing costs. (Please refer to HUD Handbook: 4155.1 Paragraph
1-11A chart)
b. Sum of existing first lien, any purchase money second mortgage and/or any
junior liens over twelve (12) months old, closing costs, prepaid expenses,
accrued late charges, escrow shortages, borrower paid repairs required by
the appraisal, discount points, and other fees as determined by the
appropriate HUD Homeownership Center (HOC), subtract any refund of up-
front MIP. The prepaid expenses may include per diem interest to the end of
the month on the new loan, hazard/flood insurance premiums, mortgage
insurance premiums and property tax deposits needed to establish the
escrow account. The existing first lien may include the interest charged by
the servicing lender, when the payoff is not received by the first of the
month, but may not include any delinquent interest.
B. Streamline Refinances
With or without an appraisal Streamline transactions involve the refinance of the FHA insured
first mortgage only. This type of loan is designed to lower the monthly principal and interest
payments on the current FHA insured mortgage and involves no cash back to the borrower,
except for minor adjustments at closing not to exceed $500.
The Limited Denial of Participation (LDP) and General Services Administration
Debarment (GSA) lists are required to be checked, however there is no need
to check the Credit Alert Interactive Voice Response System (CAIVRS).
FHA does not require repairs to be completed (except for lead-based paint)
on streamline refinance transactions, however the lender may require the
repairs to be completed; if so, they must be an out of pocket expense to the
borrower.
1. Streamline Refinance with an Appraisal: The maximum insurable mortgage
is the lower of the two calculations below:
a. “Maximum loan-to-value percentages” multiplied by the appraised value,
exclusive of closing costs.
b. Sum of the existing FHA insured first lien, closing costs, accrued late
charges, escrow shortages, reasonable discount points and the pre-paid
expenses necessary to establish the escrow account minus any refund of up-
front MIP. The existing first lien may include the interest charged by the
servicing lender, when the payoff is not received by the first of the month,
but may not include any delinquent interest.
2. Streamline Refinance without an Appraisal: The maximum insurable
mortgage is the lower of the two calculations below:
a. Original Loan Amount: The original principal balance of the existing FHA
insured mortgage, including any upfront MIP, plus the new UFMIP being
charged on the refinance.
b. Existing Debt: The sum of the existing FHA insured first lien, closing costs,
accrued late charges, escrow shortages reasonable discount points and the
prepaid expenses necessary to establish the escrow account minus any
refund of UFMIP plus the new up-front MIP. The existing first lien may include
the interest charged by the servicing lender when the payoff is not received
by the first of the month but may not include delinquent interest.
The above mortgage calculation applies only to owner-occupied properties.
Investment properties, even if originally acquired as principal residence by
the current borrowers, may only be streamline refinanced (FHA to FHA)
without an appraisal for the outstanding principal balance. The term of the
mortgage is the lesser of 30 years or the remaining term of the mortgage plus
12 years
FHA has permitted streamline refinances on insured mortgages since
the early 1980's. The "streamline" refers only to the amount of documentation
and underwriting that needs to be performed by the lender, and does not
mean that there are no costs involved in the transaction. The basic
requirements of a streamline refinance are:
The mortgage to be refinanced must already be FHA insured.
The mortgage to be refinanced should be current (not delinquent).
The refinance is to result in a lowering of the borrower's monthly
principal and interest payments.
No cash may be taken out on mortgages refinanced using the
streamline refinance process.
Lenders may offer streamline refinances in several ways. Some lenders offer
"no cost" refinances (actually, no out-of-pocket expenses to the
borrower) by charging a higher rate of interest on the new loan than if the
borrower financed or paid the closing costs in cash. From this premium, the
lender pays any closing costs that are incurred on the transaction.
Lenders may offer streamline refinances and include the closing costs
into the new mortgage amount. This can only be done if there is sufficient
equity in the property, as determined by an appraisal. Streamline refinances
can also be done without appraisals, but the new loan amount cannot exceed
the original loan amount. Investment properties (properties in which the
borrower does not reside in as his or her principal residence) may only be
refinanced without an appraisal
Refinance Authorization allows a lender to access the Upfront Mortgage
Insurance Premium (UFMIP) information for Refinance ( Refi ) cases. This
information includes the used and refundable amounts of the UFMIP from the
old case. The listed information is for a two month period, the indicated
month and the following month, and is based on the closing date entered. An
authorization number and an expiration date will be issued when the
exchange of information is verified and posted.
There are lots of reasons to ask your lender for an FHA loan instead of taking
a conventional or an expensive and risky sub-prime mortgage loan. Why not
take advantage of the many benefits and protections that only come with FHA:
Easier to Qualify - Because FHA insures your mortgage, lenders are more
willing to give loans with lower qualifying requirements so its easier for you
to qualify.
Less than Perfect Credit - Even if you have had credit problems, such as
bankruptcy, its easier for you to qualify for an FHA loan than a conventional
loan.
Low Downpayment - We have a low 3% downpayment, and that money can
come from a family member, employer or charitable organization. Other loans
don't allow this.
Costs Less - Many times, FHA loans have competitive interest rates because
the loans are insured by the Federal Government. Always compare an FHA
loan with other loan types.
Help You Keep Your Home - The FHA has been around since 1934 and will
continue to be here to protect you when the others walk away. Should you
encounter hard-times after buying your home, FHA has many options to help
keep you in your home and avoid foreclosure.
There is more to buying your home then the monthly house payment. Why not
ask for an FHA loan that will help you buy your house and keep it too? Tell
your lender you want an FHA loan for all the reasons above- FHA is a wise
choice.
What is an FHA Refinance?
An FHA Refinance is a government backed home
refinance that allows you to get 95% loan to value
on your home. With the best available rate and
terms regardless of your credit score. The
Refinance is serviced by a direct lender with the
FHA program
An FHA Refinance is a government backed home
refinance that allows you to get 95% loan to value
on your home. With the best available rate and
terms regardless of your credit score. The
Refinance is serviced by a direct lender with the
FHA program
| FHA Mortgage Rates |
The lender must provide a payoff statement in the case
binder. For all refinance loan transactions, the borrower will
not be required to make or bring the current months payment
due to closing, nor will be the principal balance of the
existing loan be reduced by the amount of that unpaid
principal.
Under the terms and conditions outlined below, FHA will
insure the following
types of refinances:
A. Regular Refinances = “cash-out” and “no
cash-out”:
1.“Cash-Out” Refinances - Effective for mortgages endorsed
on or after
October 31, 2005, FHA offers a two-tier cash-out refinance
program and in
computing maximum allowable mortgage amounts the
following must be
applied:
a. 95% Loan-To-Value:
1) The loan is limited to 95% of the appraised value.
2) The property that is security for the refinanced mortgage
must be a 1- or 2-
unit dwelling.
3) The borrower as his or her principal residence must have
owned the
subject property for at least 12 months preceding the date of
the loan
application.
4) If the 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.
binder. For all refinance loan transactions, the borrower will
not be required to make or bring the current months payment
due to closing, nor will be the principal balance of the
existing loan be reduced by the amount of that unpaid
principal.
Under the terms and conditions outlined below, FHA will
insure the following
types of refinances:
A. Regular Refinances = “cash-out” and “no
cash-out”:
1.“Cash-Out” Refinances - Effective for mortgages endorsed
on or after
October 31, 2005, FHA offers a two-tier cash-out refinance
program and in
computing maximum allowable mortgage amounts the
following must be
applied:
a. 95% Loan-To-Value:
1) The loan is limited to 95% of the appraised value.
2) The property that is security for the refinanced mortgage
must be a 1- or 2-
unit dwelling.
3) The borrower as his or her principal residence must have
owned the
subject property for at least 12 months preceding the date of
the loan
application.
4) If the 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.
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