As of April 1st the opportunity to refinance with the FHA gets a little harder as the government makes some minor changes.  Effective April 1 2009  you will no longer be able to refinance your home and take cash out of the property unless your equity position in the home is at 85% or less.

For some of you thinking this isn't a bad idea..  let me give you an example where this will affect more than a few homeowners.  Let's say you have a first mortgage and second mortgage (HELOC).  During the past year you drew money off the HELOC to help cover living expense and make ends meets.  The amount that you used was over $1000.  

Now you decide to refinance your home and due to falling values your home is valued at or greater than 85% of the outstanding mortgages you have.   Your chance to get a low rate below 5% is not an option.  SInce the mortgage amount exceeds 85% of your homes value FHA will not lend you the money to possible lower your payment and fix in your interest rates.   They say this option is temporary... we hope.  

With many of the recent legislation that was passed to help homeowners  the large majority are still left with little options.. this small piece of news didn't make headlines but will curb lending even further.

The credit market has already instituted a credit score minimum of 620 now you will not be able to borrower more than 85%.... seems a little backwards as home values fall there needs to be a way for folks underwater or at the higher LTV's to be able to lower their payments.