FHA Refinance Loan

Best FHA Lender specializes in FHA refinance loans. 

An FHA refinance loan involves the repayment of an existing loan from the proceeds of a new FHA mortgage that has the same borrower(s) and the same property.  It can be used to refinance a conventional loan, subprime loan or an existing FHA loan up to 97% of the value of the home if it is not a cash-out refinance.
 
As of October 1, 2008, FHA is offering increased FHA mortgage refinance assistance through its Home for Homeowners (Short Refi) program in order to provide aid to struggling families trapped in mortgages they currently cannot afford.
 
If a homeowner has owned their home for more than one year, FHA will allow a cash-out refinance up to 95% of the value of the home.  A FHA cash-out refinance allows the homeowner to refinance his or her mortgage at a higher amount than the current loan balance as long as there is equity in the home.  The borrower can use the extra funds in any manner.  Common uses of cash-out refinance loan proceeds include (but are not limited to) debt consolidation and home improvement.  Cash-out refinances can also be used as an alternative to a home equity loan.

Effective on FHA case numbers issued on or after April 1, 2009; FHA will only insure cash-out refinances when the loan to value is 85% or lower than the appraised value.  According to HUD’s Mortgagee Letter 2009-08, this is currently a temporary requirement:

“Given the continued deterioration in the housing market, and FHA’s need to limit its exposure to undue risk, this reduction to the maximum LTV for cash-out refinances is being instituted on a temporary basis while FHA further analyzes the housing and mortgage industry as well as its own portfolio to determine whether permanent measures should be taken.”

The following are some of the basic requirements of a cash-out FHA refinance loan:

• The subject property must have been owned by the homeowner as his or her principal residence for at least 12 months preceding the date of the loan application.
• The homeowner can not have had any 30-day+ late payments on their mortgage in the past 12 months.
• Applies to owner occupied properties only
• Loan amounts may not exceed the maximum loan limits for the area.
• All borrowers must qualify using FHA guidelines.

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 Loan.