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FHA Changes Maximum Loan To Value on Cash Out Refinances

FHA is changing the rules on “cash out” refinances on April 1, and no, it isn’t an April Fools Joke!. Up until then, we have been able to make loans to borrowers that qualified for FHA loans up to 95% loan to value for a cash out. A cash out refinance is when you get more money than is owed on your first mortgage and the closing costs to take the loan. Anything over that amount is considered “cash out” and will be limited to 85% loan to value on any loans registered with FHA after March 31.

If you would like the whole story, please follow this link to my blog and read all about it. There are other changes that are taking place at the same time. To be honest, these changes make sense in a falling value environment.

Posted by Fred Chamberlin - Eugene/Springfield's #1 Experienced FHA Mortgage Consultant on 03/16/2009 07:56 PM

Comments (10)

FHA Changes 4-1-2009 in the Mortgage / Finance Channel

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10 Comments on FHA Changes Maximum Loan To Value on Cash Out Refinances

MAR

Maybe this will inspire some of those foot-dragging buyers

Well Jim, if they want this LTV, they can't drag too long. LOL

I dont do many out here (actually I have done zero), but this is good information to know.

Well John, I would have to admit that zero is not very many. LOL.

Hi Fred, Well I should say that owners better hurry up and get that refinance done before this change goes into effect.

MAR

Hey there super Fred. I remember my sister did a cash out refi 2 years ago. At the time, my lender told her that she could only pull out 80% of the home even though it was paid off. What's up with that? it was 95%???

Sandy - From your fingers! People that are interested don't have much time.

Greg my man. You sound as if you are surprised that there are lenders out there that don't know what they are doing, especially 2 years ago.

MAR

Fred - There are a ton of people out there who are still sitting on the fence - this is great information!

MAR

I'm back!

The problem that I have with this new change is that some people need to do cash out in order to pay off other debts/liens or items that affect their debt ratios in order to qualify for the loan. These people are going to out of luck come 4/1.

I have a client with that exact problem who now wants to play the rate shoppping game, and claims that another lender said he can do 4.5%. When reality hits he and he comes back, he will no longer be able to do the loan.

Eleanor - I hope they get happy with their splinters.

Michelle - Welcome back. It is always interesting to see who is willing to commit. Fence sitting is great if all you want to do is watch. To participate, you actually have to get off of the fence.

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