FHA is Lowering the Amount of Cash You Can Get
FHA recently announced that they are lowering the maximum amount of cash you can get when you refinance your mortgage. If you are thinking of using some of the equity you have in your home to consolidate debt, make home improvements, pay for college, or anything else, you need to know this.
Here are the details.
FHA currently allows you to take out up to 85% of the equity you have in your house as cash. However, for all FHA loans that have a case number dated September 1, 2019 or later, the maximum amount of equity you can take out is being lowered to 80%.
Here’s an example of what that means.
If your house appraises for $450,000, the current rules, which go away on September 1, allow you to get a cash-out refinance for up to $382,500. After September 1, the most you can get is $360,000. That’s a difference of $22,500 that you will no longer be able to get as cash.
FHA has allowed you to get more in cash than if you got a conventional loan for years. The conventional loan limit has always been 80%, while FHA was 85%. Now, FHA is lowering the limit to match the conventional limit.
This could have a serious impact on your financial plans if you wanted to get that extra 5% of equity in cash.
The new rule says that you can still get up to 85% of your equity in cash if your lender gets an FHA case number assigned to your refinance loan before September 1. Lenders are not allowed to assign a case number to a refinance until you agree to refinance with them, so if you need that extra money, now is the time to get going on your FHA refinance. In a couple more weeks, it will be too late. The loan does not have to close before September 1, but it does need a case number assigned to it before that date.
If you need to cash out some of your equity, now is the time to do it. Contact us today so you don’t lose out.