Refinances

1) The loan is limited to 95% of the appraised value.
2) The property that is security for the refinanced mortgage must be a 1- or 2-unit dwelling.
3) The borrower as his or her principal residence must have owned the subject property for at least 12 months preceding the date of the loan application.
4) If the property is encumbered by a mortgage, the borrower must have made all of his/her mortgage payments within the month due for the previous 12 months, i.e., no payment may have been more than 30 days late and is current for the month due.
5) Subordinate financing may remain in place, but subordinate to the FHA insured first mortgage, regardless of the total indebtedness or combined loan-to-value ratio, provided the homeowner qualifies for making scheduled payments on all liens.
6) Any co-borrower or co-signer being added to the note must be an occupant of the property.
7) If the loan is scored through FHA TOTAL Scorecard and received an “Accept/Approve” recommendation, but there are one or more 30-day late payments on the first mortgage in the past 12 months, then the loan is not eligible for 95% LTV cash out.

b. 85% Loan-To-Value:

1) The loan is limited to a combined LTV (FHA insured first mortgage and any subordinated lien) of 85% of the appraised value provided the borrower has owned the property for at least one year.
2) The property that is security for the refinanced mortgage may be a 1-4 unit property.
3) Property must be owner-occupied.

i) If the property was purchased less than one year preceding the final application, the mortgage amount must be calculated using the lesser of the appraised value or the original sales price of the property multiplied by 85%.

4) Properties that are owned free and clear may be refinanced as cash-out transactions.
5) Properties acquired by inheritances within the past 12 months are eligible for a cash-out refinance transaction limited to 85% of the appraised value. The lender must document the acquisition by the borrowers via inheritance.

a. “Maximum loan-to-value percentages” multiplied by the appraised value, exclusive of closing costs. (Please refer to HUD Handbook: 4155.1 Paragraph 1-11A chart)
b. Sum of existing first lien, any purchase money second mortgage and/or any junior liens over twelve (12) months old, closing costs, prepaid expenses, accrued late charges, escrow shortages, borrower paid repairs required by the appraisal, discount points, and other fees as determined by the appropriate HUD Homeownership Center (HOC), subtract any refund of up-front MIP. The prepaid expenses may include per diem interest to the end of the month on the new loan, hazard/flood insurance premiums, mortgage insurance premiums and property tax deposits needed to establish the escrow account. The existing first lien may include the interest charged by the servicing lender, when the payoff is not received by the first of the month, but may not include any delinquent interest.

a. “Maximum loan-to-value percentages” multiplied by the appraised value, exclusive of closing costs.
b. Sum of the existing FHA insured first lien, closing costs, accrued late charges, escrow shortages, reasonable discount points and the pre-paid expenses necessary to establish the escrow account minus any refund of up-front MIP. The existing first lien may include the interest charged by the servicing lender, when the payoff is not received by the first of the month, but may not include any delinquent interest.

a. Original Loan Amount: The original principal balance of the existing FHA insured mortgage, including any upfront MIP, plus the new UFMIP being charged on the refinance.
b. Existing Debt: The sum of the existing FHA insured first lien, closing costs, accrued late charges, escrow shortages reasonable discount points and the prepaid expenses necessary to establish the escrow account minus any refund of UFMIP plus the new up-front MIP. The existing first lien may include the interest charged by the servicing lender when the payoff is not received by the first of the month but may not include delinquent interest.