Residential Cashout Refinance Mortgage Loans
Cashout refinance mortgage loans are available for owner occupied primary residences. It can be from one unti up to 4 units.
Also, residential properties that have no liens and are owned free and clear are qualified and eligible for FHA cashout refinance mortgage loans. Here are the guidelines for cashout refinance mortgage loans.
1. Full appraisal required
2. Non-occupying co-borrower may not be added. Any borrowers that are added to the loan must occupy the property.
3. A payoff statement is required in the event if the subject property has a mortgage or mortgages.
4. Cash out may be used of any purpose. However, cash out used for debt consolidation may represent a higher level of risk and must be carefully evaluated.
Mortgage Payment History
Borrowers for cashout refinance mortgage loans need at least a six month mortgage payment history. Mortgage payment histories of less than six months do not qualify for cashout refinance mortgage loans. Here are the payment history requirements:
1. Payment history ≥6 to ≤12 months: 0 x 30 for 12 months
2. Payment history ≥12 months: current and 0x30 in the most recent 12 months
Maximum 85% LTV/CLTV
If the borrower has owned and occupied the property for less than one year prior to loan application, the LTV/CLTV is limited to the lesser of the appraised value or the original sales price.
If the borrower has owned and occupied the property for at least one year prior to loan application, the 85% LTV/CLTV is based on appraised value.
If the borrower inherited the property and is occupying or will occupy the property as a primary residence, 85% LTV/CLTV based on current appraised value is allowed regardless of the length of ownership.
Occupancy Of Former Investment Property
When a borrower is re-occupying a property formerly used as an investment property, the transaction must comply with all Rate/Term refinance policies but is limited to 85% LTV/CLTV.
New subordinated financing is not allowed. However, modifying an existing subordinate lien to lower the total indebtedness is not considered a new subordinate lien and may remain in place.
If the secondary financing is an equity line, the maximum amount of the equity line is used in the calculating the CLTV.
Gustan Cho NMLS ID # 873293