FHA Mortgage Lending » FHA refinance

FHA Cashout Refinance Banks Restricted by Tighter Lending

admin — Thu, 26 Feb 2009 21:24:45 +0000

FHA mortgage loans are becoming tougher to qualify for. As of January 1, 2009 HUD announced that any FHA cash out refinance would require two appraisals when the loan to value exceeds 85%. Since the customer usually has to pay for the appraisal, this adds around $350 to the cost of refinancing with the FHA. In addition, many underwriters are taking a very close look at appraised values, due to the continuing drop in home prices. In turn, the close scrutiny of appraised values by the underwriters are making many appraisers more conservative in the values that they assign to a home. The FHA also raised the down payment requirement on purchases to 3.5% and increased mortgage insurance premiums. The net result is that an FHA mortgage not only has higher costs but also a higher probability of being turned down due to insufficient equity and more stringent underwriting guidelines.

Some Banks Reduce Cash Out Limits for FHA Mortgage Refinancing
Two smaller banks today have reduced the cash out limits on FHA home loans to 85% loan to value, despite the FHA guideline allowing 95% cash out. Rumor has it that larger banks will also follow through on lowering the loan to value limits on FHA cash out refinancing. Tougher guidelines quickly spread industry wide, so expect many more lenders to make it more difficult to cash out on an FHA refinance.

Since FHA loans have a very high default rate (roughly 12%), it is only logical that banks are imposing tougher guidelines for borrowers. The banks simply cannot afford to take on additional default risk given their weak financial position. Many potential borrowers will continue to find it difficult to obtain mortgage approval until the economy recovers and the housing markets stabilize. Based on the way things are going, it could be a long wait.

Cash Out Refinancing with FHA Loans

admin — Wed, 29 Oct 2008 23:35:33 +0000

FHA home loans have quickly become the mortgages of choice for cash out refinancing and new home purchase financing. Raising capital with a home mortgage was definitely easier in past years. As many consumers have found out the hard way, home equity loans have practically become extinct. Unless you have great credit and are able to provide full income documentation to the lending underwriter, you don’t have a shot to qualify for a conventional mortgage refinance.

Did I mention you also need to be less than 80% loan to value as well? Just last year no equity was required to get cash out when refinancing with a 1st or 2nd mortgage refinancing. After record breaking number of foreclosures every month, most lenders wised up and cut off the home equity loan product line.

In 2008, the thirty year fixed rate mortgage remains competitive and historically pretty low averaging in the mid six percent range all year. For the first time, FHA mortgage loans actually dropped below the conventional interest rate levels. FHA home loans typically carry a little bit of a higher rate because of the increased risk factor that goes along with no equity and lower credit score requirements. Read Complete FHA Refinance Article. – Article written By Sean Dornan

Choosing a FHA Mortgage Refinance

admin — Tue, 28 Oct 2008 01:53:11 +0000

Homeowners enjoy many benefits of investing in their home year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA mortgage loan can be an effective way to put that equity to work.

In the housing market, homeowners have multiple opportunities to invest in their property annually. An FHA mortgage loan can be an effective method to continue the investing. Some of the options that FHA home loan offers for mortgage refinancing on properties used as principal residences are as follows:

FHA CASH OUT REFINANCE

If a borrower bought their home quite some time ago and it has increased in market value refinancing is an excellent choice for homeowners. A Cash Out refinance will give the owners a chance to refinance their present mortgage by getting a larger home loan greater than they currently owe, which repays their current mortgage debt. This gives the homeowner equity access that has grown from their home and utilize it where needed.

In order to achieve the maximum benefits when refinancing your FHA loan, it is usually better to think of an FHA refinance after it has been determined that you have a significant amount of equity built in your home. If the property was purchased over one year prior to the purchase date, the property can be refinanced by up to 95 percent of the appraised value with the permitted closing fees, which will be different in various states.

FHA STREAMLINE REFINANCING INFO

The FHA streamline refinancing choice is termed as such due to the little paperwork required. This selection will allow you to decrease the interest rate on your present home loan fast and more often than not without an appraisal. It saves borrowers considerable time and money with features like:

o No Appraisal necessary

o No Credit underwriting

o No Qualifying Debt Ratios

o No Credit Check

o No Income Verification

o No In-Person Application

In order to be eligible for a FHA Streamlined Refinance your current mortgage loan has to be an FHA loan in good standing and the new loan must lower your monthly interest payments. This loan method of refinancing decreases your monthly expenses by reducing your home loan payments but there is not a choice to get cash back at closing. This is a great option for individuals who have a good financial status, no substantial debt because it saves you some extra money monthly that can be utilized toward something else.

Frank Collins is an avid investor in real estate and contributor to FHA Home Loans and a website to Find Low Mortgage Rates and trusted lenders in your area. Article Source: http://EzineArticles.com/?expert=Frank_Collins