FHA Chapter 13 Cash-Refinance Mortgage Guidelines On FHA Loans

This article covers FHA Chapter 13 Cash-Refinance Mortgage Guidelines On FHA Loans:

FHA Chapter 13 Cash-Refinance Mortgage Guidelines allow homeowners to qualify for a mortgage during Chapter 13 Bankruptcy repayment plan.

In this article we will cover the following topics:

  • Can you qualify for a mortgage during the Chapter 13 Bankruptcy repayment plan?
  • Doesn’t the Chapter 13 Bankruptcy need to be discharged?
  • How difficult is it to get trustee approval?
  • Can you pay off the Chapter 13 Bankruptcy with the proceeds from the cash-out refinance proceeds?

Homeowners can no longer be stuck in a five-year Chapter 13 repayment plan. Home values have skyrocketed. They can now use their equity to pay off their Chapter 13 bankruptcy balance by doing a cash-out on their homes.

Prequalify for a mortgage in just five minutes. 

Trustee Approval During Chapter 13 Bankruptcy To Approve an FHA Loan

You need to get Bankruptcy Trustee approval. The reason why you need to pull cash-out from the equity of your home. One of the most common reasons why homeowners do a cash-out refinance during the Chapter 13 Bankruptcy repayment period is because they want to pay the Chapter 13 Bankruptcy debts in full and get a discharge sooner than later.

Home values have been skyrocketing in recent years. Depending on the county and state, many homeowners have seen the value of their homes appreciate double digits every year.

Due to rising and skyrocketing home values, both HUD and the Federal Housing Finance Agency (FHFA) have increase FHA and Conventional loan limits for four years in a row.

2020 FHA loan limits are now capped at $356,362. 2020 Conventional loan limit is now capped at $548,250.

Many homeowners are pleasantly shocked to see the amount of home equity they have. Gustan Cho Associates is a national five-star mortgage company licensed in multiple states with no lender overlays. The team at GCA Mortgage Group is a mortgage company licensed in multiple states with a national reputation for being able to do loans other lenders cannot do.

Meeting The FHA Chapter 13 Cash-Refinance Mortgage Guidelines

FHA and VA are the only two mortgage programs that allow home mortgages during Chapter 13 Bankruptcy Repayment Plan.

All FHA and VA Chapter 13 Mortgage Process need to be manual underwrite. Manual underwriting is when a human mortgage underwriter needs to carefully review the file of a borrower.

The mortgage underwriter needs to make sure the borrower meets all the minimum agency mortgage guidelines. The ability to repay will be carefully evaluated.

Timely payments during the Chapter 13 Bankruptcy repayment period are a must. No late payments are allowed during the Chapter 13 Bankruptcy repayment period. Compensating factors is an important factor for borrowers with higher debt to income ratios

Mortgage underwriters will look at the stability of the borrower’s employment. The borrower’s employment needs to be strong and stable and likely for the next three years. The minimum credit score required for an FHA cash-out refinance mortgage is 500 FICO

The maximum loan to value allowed is 80% LTV. Only homeowners with equity can qualify for a cash-out refinance FHA loan.

Jammi Cash of Gustan Cho Associates is one of the top loan originators. The team at Gustan Cho Associates helps more borrowers in the Chapter 13 Bankruptcy repayment period qualify for FHA loans than any other lenders in the country. Jammi Cash said the following:

You need permission from the bankruptcy court to enter into a refinancing transaction. Hire an attorney to make the court application on your behalf. The court is going to want to know the loan term, the interest rate, the monthly payments, the closing costs, and – if you’re not paying off the plain – evidence of what your new plan payments will be. The attorney works with your loan originator to prepare the necessary financial statements and to file a Debtor’s Motion for Authority to Refinance Real Property with the California bankruptcy court. After the attorney files the motion, it takes about 30 days for the motion to be heard by the bankruptcy judge. During this time, give notice of the proposed refinance to your creditors. If no one objects and the court is satisfied that the new mortgage has a financial benefit such as saving you money every month or paying off your plan, you should receive a court order approving the refinance. The rest of the process works the same as closing any other loan. Your underwriter finishes up the paperwork and sets a date for paying off your current mortgage and closing the new loan.

Gustan Cho Associates are experts in helping mortgage borrowers qualify for an FHA loan during Chapter 13 Bankruptcy repayment period.

Reasons For An FHA Cash-Out Refinance Mortgage During Chapter 13 Bankruptcy Repayment Period

FHA Cash-Out Refinance Mortgage During Chapter 13 Bankruptcy

Homeowners with equity are eligible to do a cash-out refinance mortgage with an FHA loan during Chapter 13 Bankruptcy repayment period. The bankruptcy trustee needs to approve the mortgage transaction. One of the reasons the trustee wants to know may be the reason for the cash-out refinance.

Here are common reasons why homeowners may want to do a cash-out refinance during Chapter 13 Bankruptcy repayment plan:

  • Get the necessary funding to pay off Chapter 13 debts.
  • Repair and/or renovations are needed to the home.
  • Family emergency.
  • Medical emergency.

Whatever the reason, homeowners need the approval of the Chapter 13 Bankruptcy Trustee.

Qualifying For A Mortgage With A Lender With No Overlays

To qualify for a cash-out FHA refinance mortgage during Chapter 13 Bankruptcy repayment plan with a lender with no overlays, please contact us at Gustan Cho Associates at 262-716-8151. Or text us for a faster response. Or email us at [email protected] GCA Mortgage Group is a mortgage company. We are licensed multiple states. We have no lender overlays on government and conventional loans. The team at GCA Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

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