Waterstone Mortgage has recently learned that HUD will be reducing the loan to value limits on an FHA Cash Out Refinance from 95% to 85%. The decision has not been finalized, but due to their recent pattern of decision making I am confident this guideline will be enforced by the end of the first quarter of 2009 if not by the end of this year! Why is this important? Most people looking to refinance their homes are just looking to get a better interest rate or extend and renew the terms of the loan. However, with an FHA refinance a “cash out” refinance is treated a little differently. If you have multiple mortgages on your home, meaning you have a 1st mortgage and a 2nd mortgage or home equity loan/line of credit, and you want to consolidate them into one mortgage this must be treated as a “cash out” refinance through FHA guidelines.
HUD claims with the current state of the housing market the 95% cash out threshold is not sustainable. Typically when HUD makes a new rule it is enforced immediately without much notice in advance. Please consider this your notice and a call to attention for any people you know who need to refinance their homes. If you know of someone with an adjustable rate mortgage or a high interest rate on their mortgage, please have them give me a call so we can discuss their refinance options. Especially if you know of anyone with multiple mortgages on their property where one mortgage might have a high interest rate or is set to adjust in the near future. There is still time to act and complete a refinance in order to help everyone stay in their homes with a comfortable monthly payment.
If you have any questions or would like to discuss available loan programs please do not hesitate to give me a call. Realtors, if you have any clients or listings who find themselves in this position where consolidating multiple mortgages is in their best interest please give them my name and contact information. As always, I guarantee to provide excellent service as well as detailed and accurate information. There is still time to take advantage of great interest rates and loan programs through an FHA refinance, but you must act quickly!
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