I hope that when you read this article it is not too late. FHA is making a big change, not just to Long Island mortgages, but to mortgages across the country. Currently, if a borrower wants to refinance an FHA cash-out mortgage, they can go up to 95% of the home’s value. As of April 1, 2009, the loan to value of any cash-out refinance that is FHA-insured cannot exceed 85% of the appraised value.

Every time an FHA loan is submitted, it is assigned an FHA case number. As long as an FHA case number is assigned before April 1, 2009, you can still go as high as 95%. This means that a borrower has little to do. A loan must be submitted and assigned an FHA case number. The waiting time is over. The reason the FHA is instituting this policy is that home prices continue to fall. Long Island homes, as well as homes across the country, continue to decline, so if you’re looking for an all-cash refinance, now is the time.

Let me explain what an all-cash refinance means. First of all, this does not apply to purchases. The 97% loan-to-value limit remains in effect. There are two types of refinancing a home you already own. One is a refinancing of rates and terms. This is a refinance where all you are doing is getting a better rate. You don’t get cash when you refinance. This change does not apply to rate and term refinances. An all-cash refinance means you’re not only paying off your old mortgage, you’re also taking money back. A cash-out refinance includes paying off other debt, such as credit card debt. So even though you won’t actually receive any cash from your Long Island mortgage refinance, it is still considered a cash refinance. To put it another way, if your new mortgage only covers your old mortgage payment plus closing costs, it’s a rate and term refinance. If your new mortgage covers your old mortgage payment and closing costs, along with receiving cash or paying off other debt, it’s an all-cash refinance.

If you have plans to pay off debt or want to receive cash when you refinance your Long Island mortgage or any other mortgage and need to have an FHA-insured mortgage, time is running out. You must start immediately or you will lose this opportunity.