A refinance transaction involves repaying an existing real
estate debt from the proceeds of a new mortgage that has the
same borrower(s) and the same property. As long as the
borrower has legal title (even though not originally on the
loan), the borrower is eligible to refinance the loan.
The following must be considered when processing a refinance
transaction:
A. Maximum Percentage of Financing: The maximum percentage
of financing is governed by the occupancy status of the
property, the use of the loan proceeds, and how and when the
property was purchased. FHA will insure several different types
of refinance transactions including streamline refinances of
existing FHA-insured mortgages made with and without
appraisals, "no cash-out" refinances of conventional and FHA
insured mortgages where all proceeds are used to pay existing
liens and costs associated with the transaction, and "cash-out"
refinances.
B. Maximum Term. The maximum term of any refinance with an
appraisal
is 30 years. A streamline refinance (see Section 1-12) without an
appraisal is limited to the remaining term of the existing
mortgage plus 12
years (not to exceed 30 years).
estate debt from the proceeds of a new mortgage that has the
same borrower(s) and the same property. As long as the
borrower has legal title (even though not originally on the
loan), the borrower is eligible to refinance the loan.
The following must be considered when processing a refinance
transaction:
A. Maximum Percentage of Financing: The maximum percentage
of financing is governed by the occupancy status of the
property, the use of the loan proceeds, and how and when the
property was purchased. FHA will insure several different types
of refinance transactions including streamline refinances of
existing FHA-insured mortgages made with and without
appraisals, "no cash-out" refinances of conventional and FHA
insured mortgages where all proceeds are used to pay existing
liens and costs associated with the transaction, and "cash-out"
refinances.
B. Maximum Term. The maximum term of any refinance with an
appraisal
is 30 years. A streamline refinance (see Section 1-12) without an
appraisal is limited to the remaining term of the existing
mortgage plus 12
years (not to exceed 30 years).
| FHA Loan Programs |
What is a FHA refinance?
C. Re-Using an Appraisal. FHA appraisals on existing properties
remain valid for six months. However, they cannot be re-used during
this period once the mortgage, for which the appraisal was ordered,
has closed. An appraisal used for the purchase of a property cannot
be used again for a subsequent refinance, even if six months have
not passed. A new appraisal is required for each refinance
transaction requiring an appraisal.
D. Refinance Authorization. A lender must obtain a Refinance
Authorization Number from the FHA Connection or functional
equivalent for all FHA-to-FHA refinances.
E. “Skipped” Payments Not Acceptable. Lenders are not permitted to
allow borrowers to “skip” payments. The borrower is either to make
the payment when it is due or bring the monthly mortgage payment
check to settlement.
When the new mortgage amount is calculated, FHA does not permit
the inclusion of any mortgage payments "skipped" by the
homeowner in the new mortgage amount. For example, a borrower
whose mortgage payment is due June 1 and expects to close the
refinance before the end of June is not permitted to roll the June
mortgage payment into the new FHA loan amount.
remain valid for six months. However, they cannot be re-used during
this period once the mortgage, for which the appraisal was ordered,
has closed. An appraisal used for the purchase of a property cannot
be used again for a subsequent refinance, even if six months have
not passed. A new appraisal is required for each refinance
transaction requiring an appraisal.
D. Refinance Authorization. A lender must obtain a Refinance
Authorization Number from the FHA Connection or functional
equivalent for all FHA-to-FHA refinances.
E. “Skipped” Payments Not Acceptable. Lenders are not permitted to
allow borrowers to “skip” payments. The borrower is either to make
the payment when it is due or bring the monthly mortgage payment
check to settlement.
When the new mortgage amount is calculated, FHA does not permit
the inclusion of any mortgage payments "skipped" by the
homeowner in the new mortgage amount. For example, a borrower
whose mortgage payment is due June 1 and expects to close the
refinance before the end of June is not permitted to roll the June
mortgage payment into the new FHA loan amount.
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