Posts Tagged ‘cash out refinance calculator’

FHA Cash-Out Refinances Becomes Tough

FHA 2011 Cash Out Refinancing

There are many reasons why to refinance a mortgage, either lower the monthly rates, or shorten the amount of years due. On other reason is that in some cases there can be cash out option, where after refinancing the home owner gets a large sum of money in cash. These Option was a lucrative option for the FHA cash out refinancing plans at 2009.

These days the HUD  (U.S. Department of Housing and Urban Development) have published new guidelines for the cash out refinancing option. These are concerning the FHA Refinancing plans only, the non government insured mortgages can be still cashed out privately by the lenders specific terms.

How To Get Money With Cash Out Refinancing

The option to get cash out of a refinancing process is well known, it was used by real estate investors when the mortgage rates plunged at 2009. It was then that the FHA cash out refinancing got the leash. How to get cash out refinancing? Simple, think that a property value is $150,000 and the mortgage left to pay on the property is $100,000. With the low interest rates, the homeowner can refinance $130,000 and get $30,000 cash from the deal for which ever use he needs.

Why people cash-out? There are many reasons, the financial reason to cash-out is that with ‘cheap’ money they can pay off credit card loans, auto loans and other expensive debts they have. When monthly credit interest rates reach 20%, paying them off with a 5%-7% rates makes a lot of financial sense.

Another financial reason to cash out can be when people believe that investing the money could make them a larger profit than the current mortgage rates. Other use the cash as down payments needed when they buy another property. Another financial reason to cash-out is to pay for expensive home improvements, when paid by credit or regular loan would cost more.

FHA Cash Out New Requirements

At 2009, the HUD decided that these FHA cash out refinancing should be slowed down. The decision was made in order to avoid these Cash Out Refinances to be a quick way to get money over the tax payers insured FHA loans. New regulations were issued on these refinancing programs.

Today these refinancing programs are available with some tougher regulations. The FHA still has the streamline refinancing programs which are more easy to apply and succeed to meet their requirements.

Cash Out Refinancing Interest Rates

The mortgage rates of a cash out refinancing is usually higher than a streamline refinancing. Lenders know that you are borrowing a larger sum than is needed to cover for the current mortgage,  so they are ‘selling’ their money for higher rates. These rates apply for the new mortgage and not only for the remaining delta of the cash you take out.

On top of this there will be extra costs to the mortgage process with a cash out refinancing. The appraisal and closing costs are out of the pocket and can not be added to the new FHA refinanced mortgage. 

Guidelines For Cash Out FHA Refinancing

The basic guidelines for the cash-out refinancing are:

Have 15 Percent Equity- These refi plans are restricted only to people who have gained at least 15% of the home equity. This is done so mortgages will not be cashed out too quickly, and not too close to 100% of the home equity. This cash out FHA refinancing rule is the refinance can not exceed the 85% of the appraisal evaluation.

Owner Occupied – The rule says that the property must be used for living by the owner. This means that rented property can not be included for the FHA cash out program.

One Year Mortgage – The 12 month rule was made to avoid people using the loophole and getting a no money down FHA loan and immediately cashing out by refinancing. In case that the property was inherited.

 These are the general FHA cash out refinance rules, though they are more harsh than before the April 2009 HUD letter, for some they are still at reach, and can allow cash out for other purposes as mentioned above. It is worth to fully check the FHA refinancing requirementsto see that you can financially benefit from the refinancing process.

Should I Refinance My Mortgage Now? 2011

Should I Refinance My Mortgage Now? 2011

2011 Refinance calculator

How much will I save if I refinance my mortgage today ?

If you are asking your self now at 2011 these kind of questions, then this refinancing calculator is perfect for you. There are some terms that when all are fit refinancing a mortgage is a great opportunity to save a lot of money, or shorten the mortgage month left till all money owed to the lenders are payed.

Before you check this “should I refinance calculator” you need to make sure you are doing the right move, and doing it for the right reasons.

Do you know what is your current credit score ? Do you know if your current mortgage loan has a penalty when prepayed ? Do you plan to stay at your current house for the years to come ?

Those two simple facts can throw your refinancing plans to the recycle bin for a year or two.. So before you take quick financial acts, try to find out if NOW is the right time for you to refinance.

Which of the next sentences, describes best what you are trying to do ?

1. I want to lower my interest rate.
2. I want to lower my monthly payments.
3. I want to refinance in order to cash out my home-equity.
4. I wish to refinance into a fixed-rate mortgage.
5. I am planning to consolidate my debt (with all my credit cards).

Refinancing can bring you closer to one of these.

This calculator will answer your question when does it pay to refinance your mortgage. If you can get a lower loan rate that will reduce your monthly payments, or shorten the month left, or combine two mortgages together than it is worth the effort.

Should You Refinance Your Mortgage

With the refinancing calculator you could also find out if it pays to change the mortgage you have from a fixed rate mortgage to an adjustable rate mortgage (ARM) and backwards too.

Run a few calculations on all your possible refinancing scenarios before you go to the bank or lender and apply for a refinancing program.

In case you didn’t know there are some government loans for home buyers you might want to check, most of them for first time home buyers but not all. And you might wish to learn more on the Obama housing plan – Home Affordable Refinance Program (HARP).