Will I Qualify For An FHA Program Refinance?
Qualifying for an FHA program refinance may not be as easy as they would have you believe
. The guidelines seem to contradict each other at times, and others are just downright confusing. Trying to figure out the positive and negative aspects of this government backed program may help in finding out if you can qualify for this type of refinance.
FHA refinances generally allow you to finance up to 95 percent of the value of your home, depending on certain factors. They also claim to offer the best available rates regardless of your credit score. However, judging by the guidelines that are put in place for qualifying for an FHA refinance, this doesn't seem to be a valid claim.
New guidelines established in 2007 and taking effect as of July, 2008 did make it easier to qualify, but also don't seem to provide the best rates "regardless of your credit score." Borrowers who were delinquent on a non-FHA ARM can only qualify if they were 30 days late no more than twice or 60 days late one time in the previous 12 months. Borrowers can qualify for up to a 90 percent LTV refinance if they were no more than 30 days late three times or 90 days late one time prior to the rate being reset. This hardly means anyone can qualify "regardless of their credit score".
To qualify for a refinance of a conventional loan of up to 95 percent loan-to-value, the borrowers current mortgage must not have been reported late in the last 12 months and must be current at the time of the refinance. Any late payments will bring the maximum loan value down to 85 percent of the appraised value.
Borrowers must also be living in the property and will not qualify for an FHA loan if they have not lived in the property for at least 12 consecutive months. Cash out refinances are not allowed on conventional mortgage refinances. There is a clause in FHA refinancing guidelines stating that cash out can be permitted on properties that are owned free and clear. However, if a property is owned free and clear, that would mean that there are currently no liens on the property. This would then not be a refinance but would actually become a new mortgage, so this clause doesn't even seem to make sense.
In most FHA programs, there are also annual premiums and Up-Front Mortgage Insurance Premiums. Maximum loan-to-value ratios also vary by state depending on the average amount of closing costs for a particular state and the appraised value of the property. FHA refinances also offer streamline mortgage refinancing to existing FHA mortgage holders.
Having an expert explain the qualifications of an FHA refinance may be the best way to decide if this type of financing is what you are looking for. Like other government backed programs, things aren't spelled out as well as many people would prefer them to be. Finding an experienced mortgage broker or rep will be the best way to find out if you would be able to qualify for an FHA refinance.
Will I Qualify For An FHA Program Refinance?
By: Rob Blake
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