A weird analogy, but I’m predicting that homeowners eligible for loans guaranteed by the Federal Housing Administration (FHA) might jump on the FHA cash-out refi bandwagon — one that doesn’t exist … yet. Over the last decade or so, FHA loans lost significant popularity due to the explosive growth of the product line offered through conventional mortgage financing, thanks to the growth of the secondary mortgage market, which packages loans and sells them as securities to investors. But last October, FHA increased their cash-out refinance loan limits to 95 percent of the home’s value, and I’m predicting a substantial increase in FHA refinance activity in 2006 and 2007. Unlike conventional loans, most lenders and brokers do not increase the rate or charge extra fees for a 95 percent FHA cash-out refinance. Taking expensive, high rate, credit card debt and converting it to tax deductible, low rate mortgage debt can be a good thing as long as future credit card charges are paid off monthly. read more