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FHA Cash Out Refinances Getting More Strict as of April 1, 2009

March 27, 2009 by · Leave a Comment 

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 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 days 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 mortgage planner before Wednesday morning about registration.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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