FHA Refinance

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FHA Refinancing is today’s most commonly used refinance loan option. A main reason for this is the less stringent approach to pricing their loan. Conventional loans these days come with an abundance of “adjustments” that inflate your rate way above the low rates that you find on most advertisements. This adjustments are for FICO score, current equity positions, and if you have any secondary mortgages. FHA does not have such adjustments that allow you to take advantage of historically low interest rates.

FHA Refinancing is a better option if you have a fair to good credit rating, because generally, the standards are less strict. Qualifying for conventional refinancing can be challenging with their more stringent qualifying guidelines.

Options for FHA Refinances

  • FHA Streamline Refinance
  • FHA Cash Out Refinance
  • FHA 203K

FHA Streamline Refinance Requirements

When you have an existing FHA mortgage there are requirements that may apply when trying to refinance your current FHA loan with a FHA loan. Keep in mind the following are simply guidelines-each borrower’s situation is different. The best way to work through your options is to talk with an mortgage specialist.

  • The current mortgage must be current and not delinquent.
  • The results of the refinance must lower the monthly principle and interest payments for the borrower.
  • No cash may be taken out on mortgages refinanced using the streamline refinance process.

What are advantages of a FHA Streamline Refinance?

  • No Appraisal Requirement
  • Income is supplied but not needed to be used for qualifying – employment will be verified
  • Take advantage of today’s historic low interest rates without adding on to your existing loan balance.

FHA Cash Out Refinance

FHA cash out refinance is when a home owner pays off their existing for more than they currently owe. This is allowed by taking advantage of your homes currently equity position. The amount that the home owner is restricted to borrower is determined by the by the homes current home value (also referred to as LTV) compared to the new loan amount.

Below are requirements of a FHA cash-out refinance:

  • Home Owners who are currently delinquent or in arrears on their existing home loan are not eligible for an FHA cash-out refinance
  • Must be your Primary Residence
  • The subject property must have been owner by the home owner as their primary residence for at least 12 months prior to the new loan application date. If the home owner has not owned the property for the previous 12 months, the loan to value is calculated using the lesser of the appraised value or the original sales contract price
  • The home owner can not have any reported lates on their existing loan in the last 12 months in order to do an FHA Cash Out refinance.
  • Property must be a 1-2 unit dwelling
  • Loan amounts may not exceed the maximum loan limit for the county
  • Any co-borrower or so-signer being added t the mortgage note must be an occupant of the property.

 

 


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