REFINANCE Answers sought and divorce situation

[Anonymous]

My husband applied and got approved for a conventional refinance for our home in anticipation of a divorce here.   Unfortunately, we are now finding that it will not provide us/me with what we need to come out of this situation with to pay off debt and leave me with cash to buy somthing in near future.   Home assessed at 185k.   Conventional will not go above 80% loan.

We are thinking about switching to a FHA refinance, so we can perhaps get 85% loan.

Credit scores are 670 to 700 for him.

Current mortgage owed in 96,000 approx.

Home equity loan of 30,000.

Other credit to be paid off too !!

He would meet the 43% dti (gross income) ratio easily.

Liquid assets are very little, but a lot of pension assets.

W2 income last yr, his alone, 97,000

Lots of questions:

-- His current loan officer tells him we will need a new appraisal to do this.  He may switch loan officers - this guy I believe directed him wrongly to begin with.

-- How long does the FHA Process take?

--  You can get some cash out of a refinance if you don't go the streamlined approach, true?

-- It sounds like the loan officer you choose may be very important.   I see on the gov't site there are some groups listed at Title I and some as Title II - what does this mean?   

What % will they loan you on a refinance  - FHA?

What fees are involved?   What kind of cash upfront does one need to close?   How much is PMI if you go over 80% of the home value?

Let me know you need further info to evaluate.

[Anonymous]

You will need a new appraisal for each bank you deal with.  If you switch banks or you decide to use the same bank but FHA, you will likely need an FHA appraisal.

As far as timeframe, the FHA timeframe varies greatly so there is no real answer. 

HOw much card debt is there?  Are there other debts (cars, etc?) 

Upfront costs will vary depending upon how you r old loan is set up, escrow changes, day of the month, etc.  There will be an upfront PMI fee for FHA for more than 80% LTV (figure probably 2500-3500) that can be rolled into the new loan I believe.  You will still have the monthly PMI if you are looking at more than 80%  Also, if you break 80% it may require you to go FHA as going conventional with PMI may require scores over 700 (not sure on this)

One other thing, if you go FHA you need to look at whether you are in a community property state.  If you have some debt in your name, he would have to get the loan with your debts (but not your income) included even though you are not going to be on the loan and are getting divorced.  It is called the non-purchasing spouse clause and applies to all FHA loans in community property states and the divorce will not matter until is is offically public record and finalized.

The one thing that doesn't seem to fit (and obviously this is between you and your husband) is unless there are numerous other debts (Car loans, etc) that you are taking on, he shouldn't be maxing out the mortgage in his name to get you off of it, pay off joint debt, and give you cash out on the loan.  On top of this, you are looking at adding PMI into the equation which is an additional burden on the husband and an additional balance to the originating loan.  Again, I don't know the situation and am in no way judging it, it just doesn't add up.  My dad did the same thing for my mom when they split up and it about ruined him financially because he was basicly stuck with a huge debt load, no equity, and alimony on top of that.  Again, as long as all parties are in aggreeance great and I hope no one is offended.  It was just an ovservation I noticed and also have some personal experience with.