Refinance your 1st mortgage up to 105% Loan-to-Value

Home Affordable Refinance Program is a great option for borrowers looking for more stable payments in declining markets.

Who can be eligible for a program:

- Only Freddie Mac or Fannie Mae loans.

- Maximum Loan-to-Value (LTV) is 105%.

- There are CLTV limits (Freddie Mac) and 110% CLTV (Fannie Mae).

- Rate/Term Refinance only.

- 40, 30, 20, 15 year Fixed Rate and 5/1, 7/1, 10/1 ARM programs are allowed. If the existing loan is a fixed rate product, the new loan cannot be an adjustable rate mortgage product.

- Only 1^st mortgage is eligible.

- Second Mortgages are ineligible. Existing subordinate financing must be re-subordinated or paid off with borrower’s own funds.

- Sub-prime, FHA, VA, Alt-A, High Balance Conforming Loans (any loan above the conforming loan limits) are ineligible.

- The current occupancy (primary residence, second home or investment property) must be the same as when the original loan closed, except that the occupancy may have changed to primary residence.

- Property type is allowed:

1. For primary residence: SFR, 2-4 units, Coop, Condo, PUD
2. For second home:  SFR, Coop, Condo, PUD
3. For investment property: SFR, 2-4 units, Condo, PUD

- Fully amortizing only; the Interest-Only payment feature is not allowed.

- A borrower must have an acceptable payment history on their mortgage. The existing mortgage being paid off cannot have any 30-day late payments (Freddie Mac) and 60-day late payments (Fannie Mae) in the last 12 months.

- The program permits streamlined documentation flexibilities unless the lender chooses to obtain full documentation for the new mortgage loan.

- 620 minimum Credit Score for primary residence and 680 for Second Home and Investment Property.

- If the existing loan does not have MI (mortgage insurance) coverage, then no MI is required for the new loan. If the existing loan has mortgage insurance, the loan is currently not eligible to be refinanced under this program.

You can check on the Fannie Mae website or the Freddie Mac website if your loan qualifies for refinancing under the new program.

New Changes by Fannie Mae and Freddie Mac

Mortgage rates are low, but expect to pay more fees for a mortgage today.

Fannie Mae and Freddie Mac are adjusting their pricing grids and fees will be increasing.  Mortgage lenders which are based on  Fannie Mae and Freddie Mac platform must also increase their price adjustments.   As a result your actual rate or closing costs could be higher.  For example:   Rates for refinancing condo will be higher than single family residence rates because lenders impose the condo adjustment. “It has created a different pricing scenario from one consumer to the next,” said Rick Allen, vice president of MortgageMarvel.com. “What you see in the Sunday paper could be perfectly close for one borrower. The guy next door could be 1% higher.”
Relationship between closing costs/points you pay and rate is also changed. Paying up-front closing costs/points gets borrowers a bigger discount these days. Historically, 1 point in fee (1% of the loan amount) gets borrower a rate that’s about 0.25% lower. Now 1 point gets the rate about 0.625% to 0.875% lower.

Please note the following important changes:

The credit score/LTV (Loan-to-Value) adjustment grid has changed. 

Certain cash-out refinance adjustment will increase. 

Two-unit property adjustment will increase.

Adjustment for loans with subordinate financing will increase.

Interest-only loan adjustment will increase.

Condominium adjustment will increase.

The adjustment summarized above will apply to all loans locked on or after February 17th, 2009. In addition, the new fees will apply to all loans that need a rate lock extension on or after this date.

Read New Rules and Guidelines  for conforming and super conforming (Jumbo up to $625,500) loans.

Reduced Maximum Loan-to-Value (LTV / CLTV)

Freddie Mac and Fannie Mae have recently announced reduced maximum LTV / CLTV (Loan-to-Value) ratios for certain Standard Conforming loans:

• Cash Out for 1- to 2-unit owner-occupied properties
• Purchase and No Cash Out for 2- to 4-unit owner-occupied properties
• Purchase, No Cash Out and Cash Out for second homes
• Purchase, No Cash Out and Cash Out for 1- to 2-unit investment properties.

 

LTV
The Loan-to-Value (LTV) is calculated by dividing the loan amount into the Sales Price or Appraised Value, whichever is lower. For refinance loans, it is calculated by dividing the loan amount into the appraised value.

CLTV
The Combined Loan-to-Value (CLTV) is calculated by dividing the total of the Loan Amount and any additional subordinate financing into the Sales Price or Appraised Value, whichever is lower, or simply into the appraisal value for refinance loans

 
Many Banks have the following Maximum LTV’s / CLTV’s and Loan Limits*:

 Standard Conforming – Full Documentation – Fully Amortized  

One – Four Unit Single Family (attached or detached) One Unit PUD and Condo (attached & detached) Occupancy Loan Amt Limits Purchase Max LTV/CLTV No Cash Out Max LTV/CLTV Cash Out Max LTV/CLTV Primary Residence 1 Unit $417,000 95% / 95% 95% / 95% 85% / 85%1,A 2 Units $533,850 80% / 80% 80% / 80% 75% / 75% 3 Units $645,300 75% / 75% 75% / 75% 75% / 75% 4 Units $801,950 75% / 75% 75% / 75% 75% / 75% Second Home 1 Unit $417,000 85% / 85%1 85% / 85%1 75% / 75% Non-Owner 1 Unit $417,000 80% / 85% 75% / 75% 75% / 75% 2 Units $533,850 75% / 75% 75% / 75% 70% / 70% 3 Units $645,300 75% / 75% 75% / 75% 70% / 70% 4 Units $801,950 75% / 75% 75% / 75% 70% / 70% General Notes: Minimum FICO credit score of 620 is required. Maximum Debt-to-Income Ratio of 60% is required for properties located in MA or MN. Cash Out Transactions are not permitted in the states of Texas and New Mexico.     Loans with an LTV greater than 80% must meet the following requirements: Maximum Debt-to-Income Ratio of 55%, except where the following is required: 1 Maximum Debt-to-Income Ratio of 41%. Minimum FICO credit score of 680 is required. Secondary financing (second mortgage) is not permitted. Attached PUD and Condominiums are ineligible. Construction-to-Perm financing is permitted only on 1-Unit Primary Residence Purchase and No Cash Out transactions. Cash Out Requirements: Cash Out transactions require 12 month seasoning and ownership history. The maximum Cash Out permitted is $150,000. This limit includes the balance of any non-rate and term items paid off with the subject loan. Declining Market Notes: A Maximum LTV of 80%. Properties located in Florida: Maximum LTV of 90%. Maximum LTV of 80% when occupancy is Second Home. Minimum FICO Credit Score Requirements: Minimum FICO of 720 when the LTV is greater than 85%. Minimum FICO of 700 when the LTV is greater than 80% and less than or equal to 85%.

Super Conforming (Jumbo) – Full Documentation – Fully Amortized  

One Unit Single Family (attached or detached) One Unit PUD (attached & detached) Occupancy Purchase Max LTV/CLTV No Cash Out Max LTV/CLTV Minimum FICO Purchase and No Cash Out Cash Out Max LTV/CLTV Minimum FICO Cash Out Primary Residence 1 Unit 90% / 90% 90% / 90% 720 75% / 75% 720 85% / 85%A 85% / 85%A 700 75% / 75% 75% / 75% 660 Second Home 1 Unit 60% / 60% 60% / 60% 660 - - Non-Owner 1 Unit 60% / 60% 60% / 60% 660 - - General Notes: Maximum Debt-to-Income Ratio: 45% No 30-day late housing payments in the last 12 months. Seasoning Requirements: Refinance transactions require a minimum of 6 months seasoning (i.e. six payments made) since the most recent refinance or date of purchase. Reserve Requirements (checking, savings, CD, 401K, IRA…): Primary Residence Transactions: 2 months PITI (principal, interest, tax, insurance) Second Home and Non-Owner Occupied Transactions: 6 months PITI. Reserves are required to be liquid reserves and are exclusive of closing costs and cash-out received. Maximum Cashout: The maximum cash out permitted is $100,000. This limit includes the balance of any non-rate and term items paid off with the subject loan. An additional Field Review is required for loans with both 75% LTV/CLTV or greater and $1 million property value or greater. Construction-to-Perm financing and newly-built homes (appraisal marked proposed construction or under construction) are not permitted.   Loans with an LTV greater than 80% must meet the following requirements: Must be submitted to Desktop Underwriter. Secondary financing is not permitted. Attached PUDs are ineligible. Reserve Requirements: 6 months PITI reserves are required for each property owned including the subject property. Declining Market Notes: A Minimum FICO credit score of 720 is required when the LTV is greater than 80%.

*Some Banks that don’t use Freddie Mac and Fannie Mae platform permit cash out refinance up to 90% LTV for 1 unit primary residence with minimum 650 credit score without PMI and interest rate adjustment (up to 750K loan amount). HELOC (home equity line) – up to 350K, maximum 80% LTV

Introducing Super Conforming and Changes to Standard Conforming Loans with an LTV > 80%

I. Introduction of Super (Jumbo) Conforming

Banks are pleased to announce Phase I of the Super Conforming loan program utilizing the new 2009 loan limits established in accordance with the Housing and Economic Recovery Act. 

The new Super Conforming loan limit for 1-Unit properties in most areas is $625,500.

The Super Conforming products that are initially available are 30 Year Fixed, 15 Year Fixed, and 5/1 LIBOR ARM (5/2/5). 
Please ask your broker the Program Guidelines for complete information.  A future release with expanded eligibility is anticipated as more complete production information becomes available. 

II. Changes to Standard Conforming Loans with an LTV > 80%

Effective for loans locked on or after Monday, November 17, 2008, some banks will release the following changes for loans with an LTV (Loan-to-Value) greater than 80%:

-Eliminated the additional reserve requirements when the LTV is greater than 80%. Reserves are still required per loan program and transaction type – usually, 2 months PITI (principal, interest, tax, insurance).
-Maximum DTI (Debt-to-Income ratio) can be increased up to 55% on Interest Only products.
-Minimum FICO Score of 680 is required. Additional FICO requirements apply in Declining Markets.
-Maximum 31%-41% DTI on 2-Unit Primary Residence Purchase and No Cash Out transactions.
-Cash-out is restricted to 1-Unit Primary Residence, no longer available on 2-Unit Primary Residences or Second Homes.
-Construction-to-Perm financing is permitted only on 1-Unit Primary Residence Purchase and No Cash Out transactions, no longer available on Cash Out transactions and Second Homes.
These changes apply to Standard Conforming loans with an LTV greater than 80%. Please review with your broker Maximum LTV’s / CLTV’s and Loan Limits of the Program Guidelines for complete information.

We still have banks that have: a Conforming Jumbo up to $750K with no bump to rate, no bump for cash-out, up to 90% LTV, no reserve requirements, 1 day off MLS, minimum FICO of 650; or Jumbo up to $900K with low adjustment.

Read High LTV Mortgages On Today’s Market