Rate and Term Refinance
• Allowed.
• Owner-occupied primary residence only.
• Cash back at closing limited to $500, ($0 in Texas), and must be due to changes in the payoff and/or
closing costs and prepaids. At time of origination and loan approval, the 1003, GFE and MCAW
must show no cash back. (ML 05-43)
• No holding period but acquisition cost must be considered if owned < 1 year and not already FHA insured
(see MAXIMUM LOAN AMOUNT).
• Existing subordinate financing may remain in place.
• When paying off subordinate liens, if any portion of the funds in excess of $1000 on an existing equity
line of credit was advanced within the past 12 months and was not used for repairs or rehabilitation of
the property, the line of credit is not eligible to be paid off in the new mortgage unless the new
transaction will be treated as a Cash-Out refinance (ML 2008-40).
