Refinance Your Conventional Mortgage

FHA Refinance Loan

FHA Refinance loans are available to refinance any non-FHA loan to an FHA loan. If a borrower has a conventional mortgage they may be able to use the FHA refinance loan to obtain a significantly lower rate and monthly payment. FHA permits refinances up to a LTV of 97% provided that you are not getting any money back at closing or paying off anything other your existing mortgage.

FHA Cash Out Refinance

FHA Cash-out refinance loans are available if you have owned your home more than one year prior to the refinance. You must occupy the home (no investment properties) and are limited to 95% of the appraised value plus the allowable closing costs.

A FHA cash-out refinance loan is when a borrower refinances their current mortgage for more than they owe in order to access the equity that has accrued in the home. The amount that can be borrowed is limited by the value of the property compared to the loan amount (otherwise known as the loan-to-value or LTV).

Following are basic requirements of a cash-out FHA refinance home loan:

• The property must have been owned by the borrower as his or her primary residence for at least 12 months before the date of the loan application.
• If the property has a mortgage, the borrower must have made all of their mortgage payments within the month due for the previous 12 months, i.e., no payment may have been more than 30 days late.
• The property must be a 1 or 2 unit dwelling.
• Loan amounts may not exceed the FHA maximum loan limits for the area.
• Second liens may remain in place, but subordinate to the FHA insured first mortgage, regardless of the total indebtedness or combined LTV ratio, provided the homeowner qualifies for making scheduled payments on all liens.
• All borrowers must credit qualify.
• Any co-borrower or co-signer being added to the note must be an occupant of the property. Non-occupant owners may not be added in order to meet FHA's credit underwriting guidelines or for income purposes.
• If a homeowner is pursuing a cash-out refinance and the loan balance exclusive of FHA's upfront mortgage insurance premium will exceed $417,000, the loan may not exceed 85 percent of the appraised value.

For those that currently have a FHA home loan and do not want to take any cash out or consolidate any bills they may want to consider a FHA Streamline Refinance Home Loan for a lower rate.

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