Home loan guidelines changed in rapid fire fashion in 2008. FHA is continuing this trend with the following guideline changes going into effect January 1, 2009.
Down Payment
The minimum down payment requirement increases from 2.25% to 3.5%. For a more detailed explanation of this change with descriptive examples, click here.
Rate and Term Refinances
Quick explanation of “rate and term refinance” , new loan amount only includes existing mortgage balances being refinanced plus closing costs, prepaid expenses and any discount points.
- Maximum loan to value is 97.75% of the appraised value of the property
- If an existing home equity line of credit is being refinances and there has been an advance on the
line of credit in excess of $1,000 within the last 12 months, then the line of credit is not eligible for inclusion in the new loan. Unless the advance was for repairs and rehabilitation of the property. - Streamline Refinances without an appraisal: the new loan balance including the upfront mortgage insurance premium can not exceed the original loan balance.
- New or current 2nd mortgages (subordinated) are eligible with no maximum CLTV
- The mortgage being refinanced must be current for the month due
- Incidental cash back to the borrower at the time of closing cannot exceed $500
Cash Out Refinances
- Maximum LTV is 95% for loan amounts less than the conforming loan limit and 85% for loan amounts at or above the conforming loan limit
- Two appraisals will be required for all cash out refinances with an LTV above 85%
- For LTV above 85% the property must have been owned by the customer for at least 12 months
Up Front Mortgage Insurance Premiums (UFMIP)
- 1.75% for purchases, rate & term and cash out refinances
- 1.5% for all streamline refinances
Non-Borrower Taking Title At The Time Of Closing
- Eliminates the requirement that all parties that take title also be a borrower on the mortgage
FHA has become the loan program of choices for many interested in a home loan. If you are interested in purchasing a home or refinancing your existing home contact me at www.myhomeloanwithjay.com
Jay Williams
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