Fha Refinance Programs
FHA mortgages have always been very good loans for the homebuyer. In today's market the FHA refinance programs offer maximum benefits to the homeowner that wants to lower payments or get out of an adjustable rate mortgage. FHA offers three types of refinance mortgage loans: Cash-Out, No Cash-Out, and Streamline Refinance.
A FHA streamline refinance can only be used to refinance a current FHA mortgage and it should lower payments. This program will not allow the borrower to receive any money back at closing. The main advantage to this mortgage is that the borrower, under certain conditions, does not have to requalify for the loan. The mortgage may also be done with or without an appraisal.
Loan Type Conversion Allowed:
1. 30 yr fixed to 30 yr fixed: The resulting loan must have lower payments.
2. 30 yr fixed to 15 yr fixed: Payment cannot be more than $50 higher.
3. Fixed Rate Mortgage to Adjustable Rate Mortgage: Owner occupied homes only
4. Adjustable Rate Mortgage to Fixed Rate Mortgage
5. ARM to ARM:
6. 203K to 203B
FHA Streamline Refinance "Without" An Appraisal:
The new loan amount cannot be more than the original loan amount, OR more than the current principle balance plus closing cost. ... Whichever is less. This only applies to owner occupied as non-owner occupied borrowers can only refinance the existing balance, and do not have the option of rolling in the closing costs.
Credit verification required is only mortgage payments. Tewlve copies of cancelled checks, front and back will do this unless the underwriter prefers an in file report to verify mortgage payments.
Streamline Refinance "With" An Appraisal Required:
A FHA streamline refinance with appraisal allows the homeowner to finance the closing costs, points, and prepaids if all fits within the loan to value limits. The loan amount may be the current principle plus closing costs, points and prepaids, OR, the appraised value x 97.75% (97.65%, or 97.15%, high or low cost state). Whichever is less!
IF the smallest of these two values is greater than the original mortgage balance credit verification is required.
Streamline Refinance - "Credit Qualification Required":
The loan is calculated based on the previous formulas. Qualifying requires full employment verification, credit report, and debt to income compliance. These loans are used when the new mortgage payment will be higher, deletion of a borrower on new mortgage, or in assumptions involving due-on-sale clauses.
FHA Refinance, "No Cash Out":
This no-cash-out refinance loan may be used to refinance a FHA mortgage, a VA mortgage, a conventional mortgage, or a non-conforming mortgage and requires the borrower to fully qualify. Second mortgages may be included in the new loan if they are older than one year, if not older than one year, you must prove that the funds were used solely to repair or rehabilitate the home. If not, paying off or including these loans would be considered a cash-out refinance.
This loan can be used to buy out the equity of an ex-spouse provided it is documented in the divorce papers. It is still considered a no-cash-out because this equity is considered indebtedness.
If the home was purchased less than a year ago and is not currently a FHA loan, the loan amount will be the appraised value plus closing cost, OR the original sales price plus closing cost. Whichever is less!
If the home purchase was more than a year ago and not currently FHA, the mortgage amount will be calculated the same as a "streamline refinance with an appraisal".
FHA "Cash Out" Refinance:
This loan can be used to refinance a FHA loan, a VA loan, or Conventional loan. This loan has many advantages: Max loan to value is 90% for conventional loans but FHA loans allow 95% plus a portion of the closing costs.
Article Source: http://www.search-raven.com
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