If you're in want of a cash out refinance, the most liberal cash-out program in town is about to make qualification more difficult.
Effective tomorrow, April 1, 2009, the FHA is reducing the maximum loan-to-value on cash-out refinances by 10 percent, dropping the loan size limit from 95% of the home's value to 85%.
In its official press release, the FHA says it's making the change to "limit its exposure to undue risk".
It also lists the following cash-out requirements:
- With less than 12 months since the purchase date, a home's value cannot exceed its original purchase price -- even if home improvements were made.
- A homeowner must be current on his mortgage payments to qualify
- A second, verifying appraisal may be necessary, depending on loan traits
- Co-signers may not be added to the mortgage note in order to qualify
The last day to register a FHA 95% cash out refinance is Tuesday, March 31, 2009. The loan does not need to be "locked" -- only registered.
So, if you know that a 95% cash out FHA refinance is in your future, talk to your loan officer today about registration.