FHA Changes for 2009: Refinance

We will see several changes regarding FHA financing for 2009.  Most notably, purchase mortgages not registered with an FHA case number before January 1, 2009 will require a true 3.5% down payment, as opposed to 3% (or even 2.25% down downpayment, and 3% contribution as we were accustomed to). 

Here are some updates and reminders regarding an FHA REFINANCE.  Although FHA has been around for many years, with the market changes over the last 1-2 years, FHA has become blazing hot and is often the mortgage of choice (and many times the only choice).

Review these updates regarding refinance mortgages for FHA financing;

1. The maximum loan-to-value (LTV) for rate & term refinances (including streamlines WITH an appraisal) is 97.75%.  Two examples of a rate and term refinance would be; one where there is no cash out in excess of $500, or that all mortgages being paid off with the new FHA mortgage were used for the purchase or documented home improvement of the home.*
   
2. The max LTV for cash-out refinances is 95% for loan amounts less than the conforming limit and 85% for loan amounts at or above the conforming limit. (Must have 12 months seasoning and no 30 day late payments). 
   
3. Two appraisals will be required for all cash-out refinances with an LTV above 85%.
4. The mortgage must be current for the month due.
5. New or current 2nd mortgages are eligible with no maximum CLTV.
6. Loan amount for streamline refinances without an appraisal cannot exceed the original loan amount.
7. The FHA Secure refinance will be terminated.
8. Loan amount can include: Closing costs, discount points, current interest, prepayment penalties, prepaids, late charges, and escrow shortages.
9. Cash back on rate & term and streamline refinances CANNOT exceed $500.

 

*(One example of a non qualifying scenario would be where a home equity line was opened 3 months ago for $30,000 in cash to pay for college expenses, and you then roll that mortgage into the refinance. This would be considered cash-out).

Steve Kappre is a Certified Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group, serving the South Jersey* area. Steve specializes in;

• All areas concerning First-Time buyers; First-Time Buyer mortgages, grants, down payment assistance, tax credits, police and fire loans, rehab loans for first time buyers, and more.
• Reverse Mortgages for seniors age 62 or older.
• Equity Management strategies for high-end homes and high net worth individuals.