| Reviewing the positives and negatives of using an | | | | not qualify for an FHA loan if they have not lived in the |
| FHA program to refinance may be a good idea, but | | | | property for at least 12 consecutive months. Cash out |
| don't expect to learn what they are overnight. As with | | | | refinances are not allowed on conventional mortgage |
| many government backed programs, FHA refinancing | | | | refinances. There is a clause in FHA refinancing |
| can be both confusing and contradictory at times. | | | | guidelines stating that cash out can be permitted on |
| FHA refinances generally allow you to finance up to | | | | properties that are owned free and clear. However, if |
| 95 percent of the value of your home, depending on | | | | a property is owned free and clear, that would mean |
| certain factors. They also claim to offer the best | | | | that there are currently no liens on the property. This |
| available rates regardless of your credit score. | | | | would then not be a refinance but would actually |
| However, judging by the guidelines that are put in place | | | | become a new mortgage, so this clause doesn't even |
| for qualifying for an FHA refinance, this doesn't seem | | | | seem to make sense. |
| to be a valid claim. | | | | In most FHA programs, there are also annual |
| New guidelines established in 2007 and taking effect | | | | premiums and Up-Front Mortgage Insurance Premiums. |
| as of July, 2008 did make it easier to qualify, but also | | | | Maximum loan-to-value ratios also vary by state |
| don't seem to provide the best rates "regardless of | | | | depending on the average amount of closing costs for |
| your credit score." Borrowers who were delinquent on | | | | a particular state and the appraised value of the |
| a non-FHA ARM can only qualify if they were 30 | | | | property. FHA refinances also offer streamline |
| days late no more than twice or 60 days late one time | | | | mortgage refinancing to existing FHA mortgage |
| in the previous 12 months. Borrowers can qualify for up | | | | holders. |
| to a 90 percent LTV refinance if they were no more | | | | To figure out if FHA refinancing is a good choice for |
| than 30 days late three times or 90 days late one time | | | | you, it is recommended to find a mortgage rep or |
| prior to the rate being reset. This hardly means anyone | | | | broker who has some experience in FHA refinances. |
| can qualify "regardless of their credit score". | | | | When it comes to government backed programs such |
| To qualify for a refinance of a conventional loan of up | | | | as FHA refinances, things aren't always as black and |
| to 95 percent loan-to-value, the borrowers current | | | | white as would be preferred. There may be |
| mortgage must not have been reported late in the last | | | | advantages as well as disadvantages to refinancing |
| 12 months and must be current at the time of the | | | | using an FHA program, but consulting an expert before |
| refinance. Any late payments will bring the maximum | | | | making your decision is something that you should |
| loan value down to 85 percent of the appraised value. | | | | consider. |
| Borrowers must also be living in the property and will | | | | |