Refinancing a Colorado FHA Mortgage
Refinancing a Colorado FHA mortgage can be very easy, though it's important to understand the ramifications of the solution that you choose. Be sure to talk with your mortgage consultant to learn which solution will work best for you based on your short- and long-term financial goals.
FHA breaks their refinance solutions into two groups:
Credit Qualifying:
This includes cash out refinances, where equity is pulled from the property through a refinance of your existing mortgage. FHA says that if you've owned your home more than one year, you can pull up to 85% of the appraised value out of your home. If less than one year, you must use the lesser of the purchase price or appraised value, still limited by the 85% LTV.
All property must be owner occupied.
This solution can be used for a property owned free and clear.
This solution can also be used for a "rate and term" refinance (meaning refinancing for the purpose of lower rate exclusively). Typically an FHA credit qualifying rate and term refinance would happen if you have something other than an FHA mortgage currently, and FHA is the best solution for your refinance needs. The limiting LTV factors are a bit more complicated with this solution, please talk with your mortgage consultant for details.
Non Credit Qualifying (Streamline Refinance):
Exclusively available to owners who currently have an FHA mortgage, this solution is used only for lower payments and is not available to borrowers looking to pull cash out.
Although this is identified as a non credit qualifying solution, if the new mortgage amount exceeds the old mortgage amount, mortgage payments must have been made on time and other debts must have been paid satisfactorily to qualify for a streamline refinance (no more than two months late on current loan - see your mortgage consultant for details). No further qualifying must take place, so proof of income (for example) is not required to complete a streamline refinance. Nor do you need to prove where your cash to close is coming from.
Existing second mortgages can be left in place (with a proper subordination agreement) during a streamline refinance.
Under certain circumstances, the home being refinanced does not need to be owner occupied.
The new allowable loan amount needs to be calculated by your mortgage consultant. This calculation will help determine how your streamline can be configured.
Last updated: Monday, 10-Nov-2008 10:04:29 EST
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