FHA Refinance Updates

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Last week I wrote about the FHA Purchase updates and reminders for you. This week I’m covering the refinance side. This info may be for you personally, a friend, or a client, so I thought it was Critical that I get this info to you right away…

• Up to 95% Cash Out or 97% without cash out (rate and term)
• “Declining Market” does not apply
• Will allow OVER 100% CLTV, means the first can be 95 or 97% and the second can take it over 100% of value
• Property is no longer scrutinized under a microscope. Major health and safety issues will need to be repaired, but most cosmetic and minor issues will be ok to close
• No more mandatory well, septic, and flat roof inspections
• No minimum credit score required. No score is OK too (must build alternate credit)
• 2 years out of bankruptcy, 3 years out of foreclosure (exceptions in rare circumstances) NOTE: they can be IN a Chapter 13 and can still refinance.
• Loan limits have been increased through 12/31/2008, examples:

o Central FL = $353,750
o Sarasota = 442,500
o St Lucie = 375,000
o Tampa area = 292,500
o Jacksonville = 387,500
o Melbourne = 291,250

• Condos MAY be spot approved as long as it is under 50% rental occupied.

FHA Secure: This is the FHA Bailout program that you’ve been reading about. It’s been around for 9 months and has closed over 180,000 loans so far, helping get homeowners into stable, fixed rate loans and out of their risky adjustables. Here’s the Key: If a borrower COULD afford their payments and only fell behind BECAUSE they suffered a payment adjustment, FHA will still refinance them even if they are currently delinquent on their mortgage!

Even if they owe more than it’s worth, if their current lender will write-down the balance or will hold the rest in a 2nd mortgage, they may still be able to get a new, low fixed rate, FHA 1st.

Of course, this is not intended to make you the all-knowing guru of FHA loans, but I want you to think outside the box when it comes to helping your clients and your neighbors. Everyone’s situation is different, so make sure you refer them to someone very knowledgeable in financing to see what fits for them now.

It is estimated that 35% of all loans closed this year will be FHA, so it is absolutely CRITICAL that you know how to handle them as a real estate professional.

I also wrote a complete review and update on FHA funding in an upcoming article on AgentDirectNews.com…watch for it!