For an FHA Loan

For a Cashout Refinance

Here are the Seasoning (the time you have to be on title prior to refinancing) and mortgage payment requirements:

Must have owned and occupied the house by at least one borrower for at least 12 months prior to case # assignment.  Will need income docs or Utility bills putting them in the house currently and from 12 months back.  No exceptions for documenting residency.  Must be an income doc or a utility bill

All mortgage payments on the house, regardless of who’s name is on the mortgage, must have been made in the month due for the prior 12 months.  All of the borrowers mortgages on other properties must have also been made in the month due for the prior twelve months.  If there is a mortgage on the house, at least 6 monthly payments must have been made on time.

No NTB required

Streamline (rate and term refinance – no cash out)

(a) Mortgage Seasoning Requirements

Mortgage seasoning is a term used in the mortgage industry to describe the length of time funds have been in a bank account, specifically for the purpose of covering down payments and closing costs. Seasoning requirements can also apply to getting a loan after bankruptcy or foreclosure, and to mortgage refinances.

On the date of the FHA case number assignment / application:

  • the Borrower must have made at least six payments on the FHA-insured Mortgage that is being refinanced (where the FHA-insured Mortgage has been modified, the Borrower must have made at least six payments under the modification agreement);
  • at least six full months must have passed since the first payment due date of the Mortgage that is being refinanced;
  • at least 210 Days must have passed from the Closing Date of the Mortgage that is being refinanced; and
  • if the Borrower assumed the Mortgage that is being refinanced, they must have made six payments since the time of assumption.

Net Tangible Benefit to the Borrower

A net tangible benefit (NTB) is a financial advantage that a borrower receives from refinancing their mortgage. A reduction in the remaining amortization period of the mortgage, also known as a reduction in term, can be an NTB. This reduction can qualify as an NTB if it’s at least three years and the loan is going to a fixed rate product

Generally, when you’re going from fixed to fixed, you need to lower the combination of the rate and the annual Mortgage insurance by .5%.  There are additional rules when going from an adjustable rate mortgages to Fixed.  They can also meet net tangible benefits by lowering the term of the loan.  They must reduce the remaining term by at least three years and they cannot have the combined Principal, interest and mortgage insurance increase by more than $50/mo.

Rate and Term Refinance 

No seasoning.  No net tangible benefit.  One borrower must be in title at time of case # assignment.  If property was purchased with in the last 12 months, value is the lower of the prior purchase price + improvements or current appraised value

For a VA Loan

Interest Rate Reduction Loan – No cash out

Net Tangible Benefit – Must lower the interest rate .5%.  No exceptions for reduction in term.  Additional requirements for Fixed to ARM IRRRLs.  The loan must also recoup closing costs (not including prepaids or Funding fee) within 36 months.  If the PI is not decreasing due to a reduction in term, the Vet cannot be charged any closing costs.  

Seasoning

  1. The due date of the first monthly payment of the loan being refinanced is 210 days or more prior to the closing date of the refinance loan; and
  2. Six consecutive monthly payments have been made on the loan being refinanced.

For Cash-out

Net Tangible Benefit – Must have one of the following 8 net tangible benefits:

  1. The new loan eliminates monthly mortgage insurance, whether public or private, or monthly guaranty insurance;
  2. The term of the new loan is shorter than the term of the loan being refinanced;
  3. The interest rate on the new loan is lower than the interest rate on the loan being refinanced;
  4. The payment on the new loan is lower than the payment on the loan being refinanced;
  5. The new loan results in an increase in the borrower’s monthly residual income;
  6. The new loan refinances an interim loan to construct, alter, or repair the home;
  7. The new loan amount is equal to or less than 90 percent of the reasonable value of the home, or;
  8. The new loan refinances an adjustable rate loan to a fixed rate loan.

Seasoning

  1. The due date of the first monthly payment of the loan being refinanced is 210 days or more prior to the closing date of the refinance loan; and
  2. Six consecutive monthly payments have been made on the loan being refinanced
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