In this blog, we will cover and discuss the refinance waiting period mortgage lending guidelines on home mortgages. For homeowners who just closed their homes and who are thinking of refinancing their home loans, there are refinance waiting period requirements on mortgage loans.
The refinance waiting period after closing on a home loan may be different in rate and term versus cash-out refinance. A home buyer cannot just close on their home loan one day and turn around a refinance their home loan the following day. All mortgage refinance mortgage loans need to present a net tangible benefit to the mortgage loan borrower. We will discuss refinance waiting period on FHA Loans and Conventional Loans in this article. In this article, we will cover and discuss refinance waiting period mortgage guidelines.
Reasons Why Homeowners Refinance Their Home Loans
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Homeowners refinance their home loans for the following reasons:
- Lower mortgage interest rates
- So they can lower their monthly mortgage payments, P.I.T.I. (Principal, Interest, Taxes, Insurance)
- Rate And Term Refinance
- Change the term of their mortgage loan from a 30-year fixed-rate loan to a 15-year fixed-rate mortgage
- Do they can pay their loan balance earlier
- 15-year fixed-rate mortgages have much lower mortgage interest rates than 30 year fixed rate mortgage loans
Refinancing 15-Year Fixed-Rate To 30-Year Fixed-Rate Mortgage
There are instances when homeowners find their current mortgage payment a little too much house they can handle and refinance a 15-year fixed-rate to a 30-year fixed-rate mortgage. To reduce their monthly housing payment, homeowners can refinance their 15-year fixed-rate mortgage loan to a 30-year fixed-rate mortgage loan. This is because they cannot afford the higher 15-year fixed-rate mortgage amortization schedule. Refinance FHA Loan To Conventional Loan to avoid the FHA mortgage insurance premium. Refinance To get Co-Borrowers off the mortgage loan. Refinance To get Ex-Spouse off the mortgage loan. Do a cash-out refinance mortgage loan.
Refinance Waiting Period on Rate And Term Loans
Homeowners who need to do an FHA rate and term refinance mortgage loan have a refinance waiting period of six months from the date of the mortgage closing of their previous mortgage loan. HUD, the parent of HUD, has a fast-track rate and term refinance mortgage called FHA Streamline Refinance.
FHA Streamline Refinance Loans
No appraisal nor income verification is needed on streamlines. There is a six-month refinance waiting period from the day of closing to be eligible for FHA Streamline Refinance Mortgage. There is a 12-month waiting period after closing to do an FHA cash-out refinance mortgage. The maximum loan to value on FHA cash-out refinances is 85% Loan To Value.
Refinance Waiting Period Guidelines On Conventional Loans
Conventional Loans also have a waiting period. For homeowners who want to do a rate and term and/or a cash-out refinance mortgage loan on a conventional loan the refinance waiting period is six months. On conventional Loans, the refinance waiting period is the same for rate and term and cash-out. The maximum loan limit on Conforming Loans is $484,350 unless the property is located in a designated high-cost area.
VA Mortgage Guidelines
VA Home Loans And Guidelines: VA Loans allow up to 90% Loan To Value Cash-Out Refinancing on single-family homes. VA Mortgage Guidelines normally follow Conventional Guidelines. There are no maximum VA Loan Limits on purchases and cash-out refinances unless the property. This holds true in locations where it is deemed a high-cost area of the U.S.
Maximum VA Loan Limit on VA Streamline Refinance Mortgages
There is no loan limit on VA Streamline Refinance Mortgages. Homebuyers can purchase a higher-priced home with VA Loans. However, VA will only offer 100% financing up to the maximum VA Loan Limit. Any amount over the maximum loan limit, where borrowers needed to come up with a 25% down payment is no longer in effect.
High-Balance Jumbo VA Loans in High-Cost Counties
For example, say a buyer purchases a home for $553,100 and wants to put the least amount down. VA used to offer 100% up to the $647,200 maximum loan limit. The buyer needs to come up with 25% of the extra $100,000 since VA Loan Limit used to cap the financing at $647,200. The answer to this question is that $25,000 was the amount this buyer needs to come up with for a down payment. However, President Trump signed a bill exempting maximum VA Loan Limits.
Popular Reasons Homeowners Refinance Their Home Mortgages
There are many reasons why homeowners refinance. The most common reason homeowners refinance is to lower their monthly payments with a rate and term refinance mortgage with a lower rate than the rate they are paying now. Another reason why homeowners refinance their home loans is to pay off the home loan balance earlier by refinancing their 30-year fixed-rate mortgage loan to a 15-year fixed-rate mortgage loan.
Lowering P.I.T.I. Refinancing 15-Year Fixed-Rate To 30-Year Fixed-Mortgage Loan
On the flip side, homeowners who have 15-year fixed-rate mortgages may need to lower their monthly P.I.T.I. by refinancing their 15-year fixed-rate mortgage loan to a 30-year fixed-rate mortgage loan. 15-year fixed rate mortgage interest rates are much lower than 30-year fixed rate mortgage interest rates.
Refinancing FHA Loans To Conventional Loans
FHA borrowers will always have the annual mortgage insurance premium for the life of their FHA Loan. There are many areas in the country where home prices have appreciated, especially in California, Florida, Illinois, Texas, Georgia, and Michigan, in the past couple of years. Parts of California, Florida, and Illinois have had double-digit appreciation in the past few years.
Homeowners with at least 20% equity who currently have FHA Loans can consider refinancing their FHA Loans to Conventional Loans and eliminate the FHA mortgage insurance premium.
Lender-Paid Mortgage Insurance on Conventional Loans
Homeowners with less than 20% equity can also consider refinancing their FHA Loans to Conventional Loans with the Lender Paid Mortgage Insurance also referred to as LPMI. Lender Paid Mortgage Insurance Conventional Loans do not require private mortgage insurance or PMI to be paid by the mortgage loan borrower on Conventional Loans. The private mortgage insurance is paid for by the mortgage lender in lieu of a higher conventional mortgage rate.
Refinancing To Get Co-Borrowers Off Loan
Another major reason for homeowners refinancing their mortgage loans is to eliminate the co-borrowers and/or an ex-spouse off the mortgage loan. Many times, home buyers need a non-occupant co-borrower. This is necessary because they could not qualify for an income.
However, once the main borrower can qualify on their own, many homeowners want to get rid of the co-borrowers off the mortgage note and refinance the mortgage just under their name. Couples who go through a divorce where one partner wants the home and the other gives up the title and rights of ownership to the home normally want their name off the mortgage note. This is one of the most common reasons for homeowners refinancing as well.
Refinance Waiting Period On Cash-Out Refinances
Refinance Waiting Period on cash-out refinances on conventional loans is the same as it is for a conventional loan rate and term refinance waiting period which is six months from the date of the original mortgage loan closing. The maximum loan to value allowed on a conventional cash-out refinance mortgage is 80% LTV. With FHA Loans, the refinance waiting period for a rate and term refinance mortgage is six months from the date of the original closing date of the FHA Loans.
How Soon Can You Refinance After Closing on Your Home?
The Refinance Waiting Period on FHA Loans is one year from the date of the original FHA mortgage loan closing. The maximum loan to value on an FHA cash-out refinance mortgage loan is 80% loan to value. If you are a homeowner looking for refinancing your current home, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at email@example.com. We are a national mortgage lender with no lender overlays on FHA loans, Conventional loans, VA loans, and USDA loans.
NOTE: State of Texas has a special law when it comes to Texas Cash-Out Refinancing where the state limits the maximum loan to value at 80% including VA Loans.
September 30, 2022 - 6 min read