SECTION 7003 REFINANCE PROGRAM.01 INTRODUCTION The Refinance Program allows applicants to obtain new financing to improve the terms on their existing loan and/or finance renovations or home improvements. Loans not currently financed by AHFC, and existing AHFC loans not eligible for the Streamline Refinance Program (Section 7004), must be processed under this program requiring full credit and property underwriting. Existing AHFC, FHA insured and VA/RD guaranteed loans are typically eligible under the Streamlined Refinance option. For FHA insured or VA guaranteed loans, if the property is not presently financed by AHFC, or if it is and the refinance amount exceeds the original AHFC loan amount, a full credit package and appraisal is required and all AHFC limitations must be met. However, FHA streamline refinances of a non-ahfc loan are acceptable to AHFC under the Streamline Refinance option. The maximum loan amount may not exceed FHA requirements..02 ELIGIBLE BORROWERS Alaska residents.03 ELIGIBLE PROPERTIES Single-family residences, duplexes, triplexes, fourplexes, condominium units, units in a Common Interest Community, Type I manufactured homes or Type II manufactured homes currently financed by AHFC. For conventional, VA and RD refinances, condominium and Common Interest Community approvals may not have expired prior to loan closing. However, refinances of existing AHFC loans may be considered eligible depending on the reason for the ineligible status. The project must have applied for re-certification and been ruled as ineligible by AHFC prior to requesting a Waiver. Requests for a "Waiver of Ineligible Project Status" (Form PRJ-3) must be included in the submission package. AHFC does not require project approval on FHA insured loans..04 LOAN TERMS A. Maximum Loan Amount The maximum loan amount is the current unpaid principal balance, up to 30 days of unpaid interest on the existing loan(s) and may includeclosing costs, reserves, and the first year MIP premium, if applicable, not to exceed current AHFC, FHA, VA, RD and Second Mortgage program limits as applicable..
B. Maximum Loan to Value (LTV) 1. First Deeds of Trust Conventional VA FHA/RD 95% - Single-Family 90% - Duplex (95% CLTV) 80% - Triplex/Fourplex (90% CLTV) The amount of the VA Guaranty must be equal to 25% or more of the value Follow FHA/RD requirements C. Term 2. Second Deed of Trust 90% Combined LTV (CLTV) Properties securing SBA loans are eligible for refinance loans even though the CLTV of AHFC's first and the SBA (Small Business Administration) second lien may exceed the above maximum LTV. The SBA loan must be subordinated. 3. Renovation Loans Urban loans: See 04.B.1 Rural Owner Occupied: 95% - (LTVs above 90% require private mortgage insurance) Rural Non-Owner Occupied: 80% 15-year or 30-year For VA loans, the term may be up to 10 years longer than that of the original loan, subject to a maximum term of 30 years. For RD loans, the term is restricted to 30 years. The maximum term for second mortgage loans 15 years. The term for Type II manufactured homes is found in Section 5007.05. D. Interest Rate Rates are based on the program used for the refinance (Taxable, Rural, or Non-Conforming programs) and are published daily at www.ahfc.us Note: Existing DCRA/HAD loans for properties in urban areas are refinanced under the Non-Conforming I program.
.05 CRITERIA A. Eligible Loans 1. Loans may be Conventional, VA/RD guaranteed, or FHA insured. 2. The original loan may have been a first or second lien. First and second liens may be consolidated into one loan. 3. If the loan being refinanced is less than 12 months old at the time of loan submission, the lender must document that the original purpose was related to the acquisition or renovation of the subject property. Loans that are 12 months old or greater at the time of loan submission may be refinanced regardless of the original purpose. 4. The borrower must occupy the property, unless the loan being refinanced is a Rural Non-Owner Occupied Program loan. 5. The loan must be current at closing. Current means paid to within 45 days of the closing date. B. Limitations 1. The borrower may not receive cash back at closing, except for reimbursement of allowable closing costs and renovation costs paid by the borrower prior to closing. State Statutes prohibit reimbursement of the borrower's (or borrower's family member s) own labor. 2. The borrower may not have another AHFC loan with the following exceptions: a. Any loan made as a non-owner occupied loan; or b. Loans not originated for sale to AHFC, such as State of Alaska Department of Revenue or Department of Veterans Affairs loans. C. Tax-Exempt (TEP), VMP and Taxable First-Time Home Buyer Loans Existing TEP, VMP, and Taxable First-Time Home Buyer loans may be refinanced as Taxable Program loans. If a TEP loan is subject to recapture, the recapture feature will continue to apply. The recapture provision runs with the borrower and the property for the full ten years from the original closing of the TEP loan and is not eliminated by refinancing.
D. Military Borrowers Active duty military borrowers must meet the rotation date limitations stated in Section 1004.05. E. Lien Position AHFC's refinance loan must be in first or second (if only the second is being refinanced) lien position. Any other liens previously attached to the property, that are not included in the refinanced loan, must be subordinated or paid in full. F. Mortgage Insurance Mortgage insurance is required in accordance with Section 1003.08. G. Allowable Closing Costs All closing costs, reserves, and the first year mortgage insurance premium, may be included in the loan, provided maximum loan amounts and LTV as outlined above are met. H. Private Water or Wastewater Inspections Current inspections for private wells and wastewater systems are not required. If public water or sewer is available, hook up will not be required. However, if the borrower desires public hook up, the loan may be a refinance for renovation/home improvement and the cost of the hook-up included in the loan amount. If renovations increase the number of bedrooms in a dwelling, a new DEC approval or engineer's report certifying compliance with DEC regulations must be retained in the Lender s file. (Refer to Section 2001.12) I. Renovation Refinance Loans 1. Escrows Escrows for completion of the renovations are acceptable provided they do not exceed 50% of the total loan amount or $50,000 whichever is less, and must contain a minimum 10% contingency for cost overruns. Any funds remaining in the escrow account at completion of the project are applied to the principal balance of the loan. The term of the escrow generally may not exceed 180 days.
2. Additional Restrictions a. Type II Manufactured Home loans are not eligible for a renovation/refinance. b. Improvements may be structural in nature, or major renovations, and/or minor cosmetic improvements such as carpet, blinds, wallpaper, or painting. Luxury items such as saunas, hot tubs, etc., may be included in the renovation costs and loan amount, provided the luxury items are only a portion of the cost and the appraised value supports the loan request. c. Loans with completed improvements must be submitted to AHFC no later than one year from the date of completion and evidenced by: (i) final disbursement of loan proceeds, (ii) issuance of a certificate of completion by the original appraiser, or (iii) certification by the local municipality or borough that the work has been completed as proposed. d. The appraisal report is to be based on an "as completed" value and must show the existing floor plan as well as the as proposed room layout. A narrative description of the proposed improvements must be included in the appraisal report or completed by the lender. e. If the borrower is completing the improvements, a complete cost breakdown must be included in the submission. Labor cost paid to the borrower or a member of the borrower's immediate family may not be included in the loan amount requested. If a contractor is completing the improvements, a copy of the bid or contract must be included in the submission package. f. Any additions (new construction) to a property where the original construction began after January 1, 1992 (for energy efficiency) or July 1, 1992 (for construction inspections) are subject to applicable thermal standards and mandatory inspections as outlined in Section 2001.07. Depending on the age/condition of an existing dwelling and the scope of the proposed improvements, AHFC may require an engineer's evaluation. g. The Lender must insure that any additional square footage added to the foundation footprint conforms to the lot setbacks and does not create encroachments of any kind.
J. Other 1. An Energy Efficiency Interest Rate Reduction (EEIRR) is available if improvements result in increased energy efficiency. (Refer to Section 7002.07) 2. The State Veterans Preference is available on Refinance loans. (Refer to Section 7005).06 PROGRAM DOCUMENTATION In addition to the standard documentation outlined in Section 8000 and 8001, please refer to individual program guidelines.