FHA Cash-Out Changes
Effective January 1, 2009
The FHA is continuing their trend of change from 2008 to 2009. Last year the guidelines changed very quickly and this year the same trend is in effect as of January 2009. Here is a list of the following guideline changes.
Beginning January 1, 2009 the minimum investment requirement for an FHA mortgage will increase from 2.25% to 3.5%. A borrower currently is required to have a minimum of 3.0% cash investment. Of this amount, at least 2.25% must go toward down payment. Then, the remaining 0.75% could go towards closing cost. However, this is the the case for 2009. Starting on the first of January the minimum cash investment is going to be 3.5%… ALL of which will go toward the down payment.
Rate and Term Refinances
This is a brief clarification of “rate and term refinance.” New loan amounts only include existing mortgage balances that are being refinanced plus closing costs, prepaid expenses and any discount points. Maximum loan to value is 97.75% of the appraised value of the property. If a present home equity line of credit is being refinanced and there has been an advance on the line of credit in excess of $1,000 within the last 12 months, then the line of credit is not entitled to be included in the new loan, unless the advance was for maintenance and/or rehabilitation of the property.
Cash Out Refinances
The highest loan to value ratio is 95% for loan amounts fewer than the compliant loan limit and 85% for loan amounts at or greater than the compliant loan limit. Two appraisals will be necessary for all cash out refinances with an loan to value ratio above 85% and the property must have been owned by the customer for at least 12 months.
Up Front Mortgage Insurance Premiums
The mortgage insurance premiums will be 1.75% for purchases, rate & term and cash out refinances and 1.5% for all streamline refinances.
Non-Borrower Taking Title At The Time Of Closing
This will eliminate the obligation that all persons that take title must also be a borrower on the mortgage.