by Doreen Martel

Created on: January 06, 2009   Last Updated: February 12, 2009

With interest rates currently so low, thousands of people will be considering refinancing their homes. Many will elect to use a cash out refinance option. If you're one of the millions of Americans who currently have a home mortgage with the Federal Housing Administration, the new FHA cash out refinance changes for 2009 will impact your refinancing.

FHA Cash out refinances apply to all FHA mortgage refinances beginning with all cases opened after Januay 1, 2009. If your loan exceeds the 85% loan to value threshold then these changes will apply to you. The most significant change to the FHA cash out refinance is that lenders now require that two (2) appraisals be obtained for any property where the value of the refinance exceeds 85% of the value of the home or if the loan is over $417,000. Other changes include:

Cash out refinances up to 95%

If you're going to do an FHA mortgage cash out refinance and the amount of the refinance is equal to 95% of the value of your home you need to follow these guidelines:

* You must have lived in your home for at least 12 month prior to the date of the loan application;

* All mortgage payments during the last 12 months must have been made on time;

* The property may only have one or two units;

* If you have a 2nd mortgage on the property it must be subordinate to FHA;

* All borrowers (or signers) to the mortgage must occupy the property

Loans over $417,000

If you are considering a cash out refinance and the total loan amount will exceeds $417,000, in addition to the requirements listed above you also need:

* Maximum loan to value of 85% of the property value

If you're considering an FHA cash out refinance make sure you understand how the new regulations that went into effect on January 1, 2009 affect you. Additional information on FHA loans may be found on their website at http://www.hud.gov

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