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New FHA Cash Out Refinance Guidelines | FHA Debt Consolidation

by Nicholas Auriemma, NMLS# 1455001
6 years ago
in FHA Loan, Refinance
New FHA Cash Out Refinance Guidelines FHA Debt Consolidation

New FHA Cash Out Refinance Guidelines | FHA Debt Consolidation

Are you looking for the new FHA cash out refinance guidelines? Cashing out on your home allows you to pull equity out of the property where no mortgage currently exists. Whether you want to pay off debt, cash out, or do a combination of the both, an FHA cash out refinance can be a solution to your needs. Often, people cash out on their home when they are overwhelmed with high monthly debt payments, looking to do home improvements, or have other plans.

FHA Debt Consolidation

When you have equity in your home, you can use the FHA debt consolidation refinance to pay off credit cards, cars, student loans, home improvements, consolidate a second mortgage with a higher interest rate, or pay off other debts.

  • Other types of debt typically have higher interest rates than mortgages and consolidating debt can save a lot of money.
  • According to Experian, the average balance on a credit card is $6,506.

Cashing out or consolidating debt may be a solution for borrowers overwhelmed with high monthly payments.

Save Money By Cashing Out

Often, borrowers are amazed at how much they can save when going through with an FHA cash out refinance or FHA debt consolidation refinance. Your situation is unique and results vary, but you can go over your case scenario with a Loan Originator to eliminate high monthly payments. In some cases, borrowers can eliminate all of their other debt obligations.

New FHA Cash Out Refinance Guidelines

Mortgagee Letter 2019-11, effective for case # assigned on or after September 1st, 2019 made a change to maximum loan-to-values when cashing out with an FHA loan:

  • The new maximum loan-to-value and combined loan-to-value was reduced from 85% to 80%.

Other guidelines:

  • No mortgage trade line, including mortgage line of credit payments, with any current delinquency or any delinquency within the last 12 months of the case number assignment date.
  • Are only permitted to owner occupied residences.
  • Debt-to-income ratios vary depending on the borrower’s case scenario and Automated Underwriting System (AUS) findings.
  • See waiting periods for bankruptcy and foreclosure for current waiting periods.

Some mortgage companies have stricter FHA cash out refinance guidelines called an overlay, which is an internal guideline on top of FHA guidelines. Some examples include, but not limited to a specific credit score, maximum debt-to-income ratios, manual underwriting, and other internal guidelines.

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Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma is a Loan Originator at Nationwide Mortgage & Realty, LLC, providing information on mortgages that can often be confusing even to real estate and mortgage professionals. Borrowers can be discouraged because mortgage professionals can be mistaken due to guidelines always changing, the extent of guidelines, their company having an overlay (stricter guideline), or other lenders not offering a loan program. Call or text Nick anytime at 630-779-8430 or email at nick@nationwidemtg.net.

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Restrictions may apply. All loans are subject to credit, underwriting and property approval guidelines.  Nationwide Mortgage & Realty, LLC is not acting on behalf of or at the direction of HUD/FHA or any government agency. CO: Check license status of your mortgage loan originator at www.dora.state.co.us/real-estate/index.htm. Also licensed in: CA, FL, IN, NC, TN, VA, WI and TX: NMLS ID 276777. Virginia law says that finance charges may be higher in a refinance. Illinois Residential Mortgage License | MB. 6760210. WA: Consumer Loan License MB-276777. GA: Georgia Residential Mortgage Licensee 60857. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law.

  • Home
  • Request Information
    • Apply Now
  • About Us
    • Career Opportunities
    • Contact Us
    • Meet the Team
  • Purchase
    • Conventional Loan
    • Condotel & Non-Warrantable
    • FHA Loan
    • FHA 203k
    • Fix & Flip
    • Investment
    • Jumbo & High Balance
    • New Construction
    • Non-QM Loans
    • USDA Loan
    • VA Purchase Loan
  • Refinance
    • Cash Out & Debt Consolidation
    • Conventional Refinance
    • Condotel & Non-Warrantable
    • FHA 203k
    • FHA Streamline Refinance
    • Investment
    • Non-QM Loans
    • Reverse Mortgage
    • VA IRRRL
  • Loan Process
    • Application Checklist
    • Credit Report
    • Home Buying Do’s and Don’ts
    • Interest Rates
    • Mortgage Calculator
    • Pull Credit
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Nationwide Mortgage & Realty, LLC
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NMLS # 276777
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