FHA loan program was created to help increase homeownership. Buying a home easier with FHA and less expensive than other types of real estate mortgage home loan programs.
FHA Loans Cash Out Mortgage Refinance
FHA loan program allows for a mortgage refinances of owner occupied properties. The maximum cash out refinance loan cannot exceed 85% of the appraised value of the home, which is 5% more than on a conventional loan.
The following is a brief discription of the FHA Qualifications guidelines for FHA Credit home loan
Cash out refinance is defined as follows: A mortgage refinance where borrower gets more than $2,000 back after close of transaction, and / or, any refinance that involves consolidating a second mortgage or equity line that is less than 1 year old.
You refinance is to result in a lowering of the borrower's monthly principal and interest payments.
- The mortgage to be refinanced should be current (not delinquent).
- NO cash may be taken out on mortgages refinanced using the streamline refinance process.
- Property Value X 85% = New Maximum Loan*
- Maximum Loan - Amount Owed = Approx. Cash Out Amount
The cash out from your refinance mortgage can be used for any of the following:
- Home Improvements
- Bill Consolidation (and mortgage if second is less than 1 year old)
- Large Purchases
- Schooling
- Vacation
- Investment(s)
You may use the cash out refinance for 1-4 unit properties. You do not have to have an existing FHA loan in order to do a cash-out refinance.
An advantage of the program is if you have had previous credit issues, there is no minimum FICO score requirement. Also, you may cash out refinance sooner than you could with a conventional loan after major credit issues such as:
- 2 yrs. after a Bankruptcy vs. 3 yrs. for Conventional
- 3 yrs. after a Notice of Default / Foreclosure vs. 4 yrs. for Conventional
Debt
Debt is a word your FHA loan officer uses to describe any situation that you borrow money. "Too much debt" is how the industry describes situations where people borrow more money than they can easily repay. There are a lot of types of debt: credit card debt, department store debt, charge accounts, auto loans, student loans, mortgages, and money that you may owe the Internal Revenue Service. You might also borrow from parents, relatives, and friends, although those debts may not be reflected in your credit report.
Your ability to borrow more money or to have your credit extended is directly reflected by how much debt you carry. Mortgage lenders, for example, determine your purchasing ability by applying a debt-to-income ratio (a ratio that is calculated by totalling your monthly debt payments plus the proposed monthly debt payment divided by your gross monthly income). Too high of a debt-to-income ratio reflects greater risk with the loan and may result in rejection of the credit application. Most mortgage lenders will allow you to pay up to 42 percent of your gross monthly income in debt service. Of course this may vary depending upon the loan size, the type of loan, and the type of property you are purchasing.
FHA Credit Issues
General FHA guidelines regarding a person credit history
FHA guidelines Full Article.
First Time Homebuyer
Owning a home can be a significant first step in attaining financial independence. We can help you eliminate rent payments, build equity, and feel the personal satisfaction of calling a home your own. With our Mortgage Guarantee, you can have a pre-approved mortgage amount before you decide on the home you want. Your pre-approved mortgage provides you the buying power of a cash buyer.
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