We want to help you better understand the terms used in the lending process
Is there any way to get an exception for a cash out refinance on a jumbo loan?
Send your request to. Include the 1008, 1003 and a copy of the credit report. Also, be sure to give the reason why the exception is needed and why it should be granted.
My borrower wants to do a cash out refinance of his primary residence that he owns free and clear. He took the house off the market about three months ago. Am I going to run into any problems?
Generally, the house must be off the market for six months in order to do a cash out transaction. However, Fannie Mae will allow the transaction up to 70% loan-to-value (LTV) as long as the property is removed from the market prior to taking an application.
My borrower is currently in a loan with a 25 year term. Can she do a streamline refinance into a 30 year term?
Yes, provided your borrower meets the Net Tangible Benefit requirements.
For a Fannie Mae conventional purchase, can a borrower pay off an auto loan to eliminate the monthly debt to bring payment ratios down in order to meet debt-toincome (DTI) qualifications?
According to Fannie, payoff or pay down of debt solely to qualify must be carefully evaluated and considered in the overall loan analysis. The borrower’s history of credit use should be a factor in determining whether the appropriate approach is to include or exclude debit for qualification. Generally,
Installment loans being paid off or paid down to 10 or fewer remaining monthly payments do not need to be included in the borrower’s long-term debt
If a revolving account will be paid off and closed, the monthly payment on the current balance does not need to be included in the borrower’s long-term debt
It can be excluded from the debt-to-income (DTI) ratio
If a revolving debit is to be paid off and not closed, a monthly payment on the current balance should be considered long-term debt
If a borrower has impounds (uses an escrow account) for taxes and insurance, do they have to impound for flood and homeowners insurance? Or can they just impound the homeowners and not the flood?
No. If the borrower is impounding homeowners insurance, the borrower must impound the flood insurance, too.
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C A L C U L A T O R
Understanding what you can afford is an important step in the lending process.