FHA Temporarily Reduces Cash-Out Refinance LTV
Effective for April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser’s estimate of value. This restriction refinances is being instituted on a temporary basis while FHA further analyzes the housing and mortgage industry as well as its own portfolio to determine whether permanent measures should be taken.
It appears as though the US Department of Housing and Urban Development (HUD) is all too aware of the declining home values across the United States and is looking to limit their exposure for the cash-out refinance loan scenario. Hopefully, the previous 95 percent loan-to-value limit will be reinstated at some point down the road.
The current FHA 96.5 percent LTV limit on Rate/Term refinances (refinancing your existing mortgage only) has not been changed.
In a somewhat rosy on the surface report issued today, sales of existing home sales rose 5.1 percent in February, the largest increase in nearly six years. Unfortunately for property values, the increase is being attributed to falling home prices and mortgage interest rates.
There is a debate as to whether the housing market will begin to heat up into 2009. On one side, you have the folks that feel current low home prices and low mortgage rates will bring the offers in. The other side thinks that continued mounting job losses and declining incomes will keep people on the home-buying sidelines. New housing starts are still dismal, so it may be a stretch to call a housing market bottom this year.
On a bright note, the 10-year Treasury has declined a bit on the week and mortgage rates are still looking awesome.
If you are thinking about refinancing now, and plan to stay with your new mortgage for the long term (at least 5 years or more), now might be the time to act if you have a good credit score and are near that 80 percent loan-to-value ratio. The reason being that home values have been very volatile by area. Just one or two recently purchased foreclosure or rock-bottom priced homes in your area could bring the appraised value of your home down quickly, and possibly out of the “Under 80 LTV” sweet spot for refinance rates.
Many homeowners in the refinance market feel that rates will drop further and are holding off for even lower rates. This could prove costly if the value of their home drops in the meantime, and results in an “Over 80 LTV” refinance scenario.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
It appears as though the US Department of Housing and Urban Development (HUD) is all too aware of the declining home values across the United States and is looking to limit their exposure for the cash-out refinance loan scenario. Hopefully, the previous 95 percent loan-to-value limit will be reinstated at some point down the road.
The current FHA 96.5 percent LTV limit on Rate/Term refinances (refinancing your existing mortgage only) has not been changed.
In a somewhat rosy on the surface report issued today, sales of existing home sales rose 5.1 percent in February, the largest increase in nearly six years. Unfortunately for property values, the increase is being attributed to falling home prices and mortgage interest rates.
There is a debate as to whether the housing market will begin to heat up into 2009. On one side, you have the folks that feel current low home prices and low mortgage rates will bring the offers in. The other side thinks that continued mounting job losses and declining incomes will keep people on the home-buying sidelines. New housing starts are still dismal, so it may be a stretch to call a housing market bottom this year.
On a bright note, the 10-year Treasury has declined a bit on the week and mortgage rates are still looking awesome.
If you are thinking about refinancing now, and plan to stay with your new mortgage for the long term (at least 5 years or more), now might be the time to act if you have a good credit score and are near that 80 percent loan-to-value ratio. The reason being that home values have been very volatile by area. Just one or two recently purchased foreclosure or rock-bottom priced homes in your area could bring the appraised value of your home down quickly, and possibly out of the “Under 80 LTV” sweet spot for refinance rates.
Many homeowners in the refinance market feel that rates will drop further and are holding off for even lower rates. This could prove costly if the value of their home drops in the meantime, and results in an “Over 80 LTV” refinance scenario.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Labels: business, credit scores, economy, fha refinance, finance, home loans, money, mortgage rates, refinance, refinance rates, refinancing
posted by Jim Bisnett at
11:39 AM
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