Maximum Value Loan For A Refinancing FHA – Top Mortgage Lender In Houston

Federal Housing Administration’s mortgage insurance programs have a long history of helping low- and moderate-income borrowers and those with credit problems. FHA insured loans offer flexible underwriting guidelines over conventional loans and can be used to buy a FHA home mortgage lender or refinance an existing loan. FHA offers a competitive maximum loan-to-value ratio on its various refinancing options.

The basics

An FHA refinance involves repaying an existing conventional mortgage or FHA-insured with the proceeds of a new FHA loan. The government agency will provide three types of refinancing: streamlining, no cash-out (rate and term) and cash-out refinance.

FHA offers a refinancing option of limited duration for homeowners in trouble because of more on their home than it is worth. The FHA short refinancing option begins September 2010 and is scheduled for completion on December 31, 2012.

The maximum LTV represents the highest loan amount FHA insures compared to the appraised value of the property. The LTV ratio is expressed as a percentage and is based on the primary mortgage. The max LTV varies depending on the type of refinancing.

One-time Up Front Mortgage Insurance Premium of 2.25 per cent is taxed on each FHA home mortgage lender.

Streamline

A streamline refinancing involves minimal underwriting and is designed to reduce the principal and interest payments of the borrower. Only available for existing insured FHA mortgage borrowers, the LTV aerodynamic maximum is 97.75 percent.

The streamline can be completed with or without an evaluation. With an estimate, the amount of the loan cannot exceed the lesser of the following two calculations: 97.75 per cent of the appraised value, plus the new premium mortgage insurance premium in advance, or the sum of the principal balance existing and the UFMIP.

Without an assessment, the loan amount cannot exceed the outstanding principal balance less the applicable UFMIP refund as well as the new UFMIP charged on the refinancing, according to FHA Outreach.

Rate and duration

The rate and duration of refinancing is designed to change the interest rate and / or repayment term of the loan. Borrowers can refinance an existing or conventional FHA loan. The maximum LTV is the littlest of 97.75 percent of the newly estimated value of the property or existing debt, according to FHA Outreach.

When the refinancing involves a UFMIP that is funded in the new loan, the maximum LTV is 100 percent of the appraised value.

cash Out

Cash-out refinancing allows homeowners to access equity in their home to pay existing debts and liens, keep the product for future use, or a combination of these. The maximum LTV is 85 percent because this type of refinancing presents an increased risk to the lender.

Considerations

FHA short-term refinancing option requires the lender to participate in the existing conventional loan. The maximum LTV for borrowers with negative equity in their home is 97.75 percent. If a second mortgage (subordinated or junior lien) exists, including a Home Equity Line of Credit, the combined loan-to-value is 115 percent.

A streamline refinance provides for a 125 percent CLTV. The rate and duration and money at do not allow an increase in CLTVs.

Debt-Income Ratio

When you apply for an FHA loan your lender uses your credit report to calculate your total monthly debt payments. Your lender divides your debt payments into your income to determine your debt-to-income ratio. You cannot get an FHA loan if your DTI ratio exceeds 43 percent. If you take the new credit, such as car loan or a credit card during the mortgage process the new payment could cause your DTI to rise above the maximum allowed and the result in your lender canceling the loan.

Other considerations

Your credit score just before closing the mortgage can make or break your loan. In addition, your lender also checks your job and if it appears that you have lost your job or changed jobs since the beginning of the mortgage process your lender may cancel or delay the closing of the loan until you can check your new source of income. The problems that can arise with the financed property can also cause an FHA mortgage to fall through at the last minute.

Leave a Reply

Your email address will not be published. Required fields are marked *