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Are you presently considering refinancing your home? possibly you have heard how interest rates are at 5 year lows or that FHA refinance loans and their efficient programs have become hugely popular. lucky for you, both of those things are true making for an excellent refinance opportunity. And it is no more difficult to apply for an FHA mortgage than it is for a Conventional mortgage. Before you decide to refinance, you should know the important requirements for FHA Mortgages. To be eligible for FHA refinance loans, your monthly housing expenses (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income. This is called the “Top Ratio” and it should be below 31%. You must also have enough proceeds to pay your housing expenses plus all additional monthly debt. This is called the “Bottom Ratio” and it needs to be below 43%. These percentages may be exceeded with compensating factors. Your credit background will also be fairly considered. FHA refinance loan requirements are not entirely credit score driven, while it is helpful to have at least a 580 FICO score to achieve a quicker approval. FHA guidelines are written in a way that provides the borrower the benefit of the doubt that there had been, at some point in their past, circumstances beyond their control, and as long as the borrower has recovered from those circumstances in a reasonable method, they’re generally going to be credit-eligible for an FHA refinance loan. If you have had a preceding bankruptcy, it may still be doable to get an FHA Refinance. If you have been discharged from a chapter 7 bankruptcy for two years or more, you are eligible to apply for an FHA refinance mortgage. If you are in a chapter 13 bankruptcy and have made all court approved payments on time and as arranged for at least one year, you are also eligible to make an FHA mortgage application. FHA Refinance Loans present several options to meet the needs of your present home equity scenario. If your home has positive equity, you may be able to refinance up to 98.75% or 97.75% of the appraised value of the home or the total you are refinancing plus closing costs, whichever is lower. If you wish to take cash out of the property, then the highest financing amount is either 95% or 85% of the present appraised value, depending on the borrowers qualifications. If you do not have sufficient equity in your home to pay off your present mortgage or cover your refinancing closing costs, then you should ask your lender to consider a “Write Down”. A “Write Down” is when your lender writes off the excesss balance owed for the purposes of refinancing a mortgage. The Housing bill that goes into effect on October 1st provide for a Write Down to 90% of the present appraised value for delinquent mortgage FHA refinances. Offering this option is at the discretion of the lender.
Article Source: http://www.articlecafe.net
Spencer is an FHA lending expert and has published many articles about the modern changes in FHA refinance requirements. You can find out more information about FHA Refinance Loans and FHA Mortgages at www.FHA-101.com.
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