This article covers mortgage after home purchase. Many folks need mortgage refinancing after they purchase their home. There are various reasons why they seek a refinance mortgage after closing on their home.
In this section, we will cover the reasons why some homeowners need to do a mortgage refinancing as soon as possible. There are home buyers who could not qualify for a regular FHA or Conventional loan, so they closed with a higher interest NON-QM Loan.
The reason to refinance may be to get a non-occupant co-borrower out of the loan. Divorce and divorce decree may mandate for the person awarded the home to refinance the ex-spouse out of the mortgage note. Some folks have higher interest rates due to having lower credit scores when they first purchased the home.
Cash-Out Refinance After Home Purchase on Government Loans
Many homeowners do not like the FHA Mortgage Insurance Premium and would like to refinance their FHA into a Conventional loan. Homeowners may need funds and tap into the equity in their homes by doing a cash-out mortgage refinancing.
Credit scores is the primarily factor on mortgage rates on government loans. Loan-to-value does not impact mortgage rates on government-backed loans.
Many folks are under the impression that government loans are not affected by pricing adjustments on lower credit scores because a government entity insures them. Loan-to-value does not impact credit score pricing but credit scores do.
Minimum Credit Score Requirements On Mortgage Refinancing
HUD only requires a 580 credit score. Fannie Mae and Freddie Mac require a 620 minimum credit score. VA does not have a minimum credit score, and minimum credit score requirements are up to the lender. There are no credit score requirements on VA loans. VA loans are the best mortgage loan program in the nation.
There is no minimum credit score requirements on VA loans. There is no maximum debt-to-income ratio on VA loans for borrowers with strong residual income. There is no maximum loan limit on VA loans.
To get an approve/eligible per Automated Underwriting System Findings, a 580 credit score for VA loans is recommended. The higher the credit score is, the lower mortgage interest rates will be on all loan programs.
Government loans are FHA Loans, VA Loans, and USDA Loans
However, mortgage interest rate hits do apply to government loans as well as all other loan programs. Homebuyers who close on their home and can get their credit scores higher can qualify for mortgage refinancing at lower rates. Refinancing home loans to a lower rate can save tens of thousands of dollars over the course of the mortgage loan. However, there are minimum waiting periods to refinance after home purchase. For both FHA-insured mortgage loans and conventional loans, there is normally a six-month waiting period.
FHA To Conventional Mortgage Refinancing
Homebuyers who had great credit but had high debt-to-income ratios were forced to close with FHA Loans instead of Conventional loans.
HUD, the parent of FHA, allows a mortgage applicant to have debt-to-income ratios as high as 46.9% front-end and 56.9% back-end.
HUD, Fannie Mae and Freddie Mac allows for non-occupant co-borrowers to be added on to the main borrower in the event that borrowers have high debt-to-income ratios. VA loans allow for co-borrowers but the co-borrower need to be married to the veteran borrower.
Credit Score Guidlines For Refinance After Home Purchase
With conventional mortgage loan programs, the maximum debt-to-income ratio allowed is 45% DTI normally, VA loans allow. 100% cash-out refinancing for veteran borrowers. The minimum credit score allowed for conventional mortgage loans is 620.
The minimum credit score allowed is 580 for a 3.5% down payment on home purchase. With FHA loans, there is an upfront mortgage insurance premium as well as an annual FHA MIP throughout the life of the loan.
The annual FHA mortgage insurance premium for a FHA loan is 0.55%. Many folks who close with a FHA can see if they are eligible to qualify for a conventional loan. This way, they can eliminate the monthly FHA mortgage insurance premium.
VA And FHA Streamline Mortgage Refinancing
Homeowners with a current VA or FHA mortgage can refinance with another VA or FHA loan with Streamline. Streamline refinance mortgages are available for both VA and FHA loans. With our special streamlined mortgage refinancing, there is no income verification, and no appraisal required on VA or FHA loans.
Credit scores are used to price mortgage rates on VA and FHA streamline loans. Borrowers can have derogatory credit and recent late payments. However, borrowers cannot have been late on mortgage payments in the past 6 to 12 months.
Late payment of 30 days late is allowed in the past 12 months. However, borrowers need to have been timely in the past 12 months only with their mortgage payments. Borrowers do need a job. However, income will not be verified. It is a very simple straightforward fast refinance mortgage program for those who have a VA or FHA-insured mortgage loan. The waiting period to participate in the VA or FHA streamline refinance mortgage program with no overlays is six months from the original mortgage loan.
Cash-Out Refinance After Home Purchase
Homeowners can do a cash-out mortgage refinancing for FHA, VA, and Conventional loans. The maximum amount of cash-out allowed on FHA-insured mortgage loans is 80% loan-to-value. The maximum cash-out on conventional mortgage loans is normally 80%.
Two-to-four unit homes have lower loan-to-value caps on cash-out refinance after home purchase versus single-family homes.
Some lenders will do up to 80% loan-to-value on a conventional mortgage loan with no lender overlays. Other lenders will limit their cash-out mortgage loans to 75% loan-to-value to due lender overlays. The Veterans Administration allows 100% LTV on cash-out mortgage refinancing.
Waiting Period on Refinance After Home Purchase
The following applies to homeowners who just purchased a home and need to do a refinance after home purchase. Homeowners may intend on doing major renovations to the property, hoping the market value will go up.
Many homeowners want to refinance after home purchase and intend on doing a cash-out refinance. There is a minimum six-month seasoning requirement with a cash-out refinance after home purchase on conventional loans.
FHA hoans require a one-year waiting period to qualify for FHA cash-out refinance after home purchase. Homeowners who need to qualify for a mortgage with a lender with no mortgage overlays on government or conventional loans can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has no lender overlays on FHA, VA, USDA, and Conforming loans. We are available 7 days a week, evenings, weekends, and holidays.
