Quantcast

The FHA cash-out refinance option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. It can help them pay for home improvements, college tuition, or student loan debt.

FHA Mortgage Loan Rates

January 18, 2020
FHA Rates for January 18, 2020
Compare 30 Year Fixed Mortgages
Compare 15 Year Fixed Mortgages
Use our mortgage calculators
to see what you can afford!
Get started one
Get started two
Get started three
Get started four
FHA.com is a privately owned website, is not a government agency, and does not make loans.

Choose a Loan Type

then
get
your

Your Credit Score

Do you know what's on
your credit report?
Get Credit Score Button
Get Credit Score Button
FHA.com is a privately owned website, is not a government agency, and does not make loans.

Pros and Cons of FHA Cash-out Refinancing

Turning Some of Your Home Equity Into Cash

A cash-out refinance can be a smart option for many homeowners. Whether it’s for home improvement, college tuition, debt consolidation (to pay off other high interest rate loans), student loan debt, or home remodeling, you can access money that you have in an illiquid asset. Many homeowners even choose to get a cash-out refinance to create a personal cash cushion, or put the money to work by investing.

Pros:

  • You Can Take Advantage of Low Interest Rates

    A big plus for FHA cash-out refinances are the universally low interest rates. Mortgages, in general, offer lower rates than credit card companies or student loan providers, which is why borrowers choose to consolidate their debt with a single, replacement loan in the form of a mortgage.

  • Your Home Equity Can Be Turned Into Cash

    Using the equity you have on your home for immediate cash allows you to pay for expenses of all kinds, whether it be home renovations, college tuition, or medical bills. You can access money that you have in an illiquid asset in order to accommodate those costs. Many homeowners even choose to create a personal cash cushion, or put the money to work by investing it.

  • FHA Loans Are Assumable

    An assumable loan means that the terms and conditions of the mortgage loan can be transferred from the existing owner to another buyer. The lender, who is the holder or servicer of the mortgage, determines the creditworthiness of the Assumptor, in accordance with standard mortgage credit analysis requirements.

  • Qualification After Financial Missteps Happens Sooner

    Time needed to qualify after a bankruptcy, foreclosure or short sale is reduced to two or three years for FHA loans. The FHA allows you to qualify in as soon as two years after the discharge of a Chapter 7 bankruptcy or short sale, and after one year of making payments on a Chapter 13 bankruptcy. For bankruptcies the date starts at the time of discharge - not filing.

Cons:

  • You'll Need to Get Your Paperwork Ready

    Remember the pages and pages of documents you printed out when you got your home loan? Get ready to do it all over again. The cash-out refinance is treated just as any other mortgage transaction, where you’ll need bank statements, W-2 forms, pay stubs, and much more.

  • Maximum FHA Lending Limits May Not Meet Your Needs

    The FHA has a maximum loan amount that it will insure for each county in the United States. This is called the FHA lending limit. It may not be enough if you need a large cash-out. Your type of home, such as single-family or duplex, can also affect these numbers.

  • Mortgage Insurance Requirements Can Complicate Your Costs

    If you are refinancing from a conventional for an FHA cash-out, keep in mind the issue of mortgage insurance. Upfront Mortgage Insurance and ongoing monthly premiums are required by the FHA loans (regardless of the down payment amount), which can run up your costs.

- LEARN MORE ABOUT -

FHA Refinance Options for Homeowners

SEE YOUR CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


GET STARTED

FHA Loan Articles and Mortgage News

FHA Cash-Out Refinancing Loan Tips

January 6, 2020 - One mistake about house hunting that’s easy to make is assuming that property values are similar no matter where you look. If you did house hunting upstate, your results downstate may be different. One area may be experiencing a plateau in values while another may not.

FHA Loans and Your Monthly Mortgage Payment

January 1, 2020 - Not all home loan transactions involve the same expenses, and depending on the lender, you may find certain companies may omit or consolidate certain costs, or that the costs are labeled differently but have the same or similar expectations.

When Does Refinancing Require a Credit Check?

December 27, 2019 - If you are looking for a bad credit refinance loan, or are worried that your current credit scores aren’t right for home loan approval, it’s logical that you might wonder if there is a refinance loan that has no credit check.

Home Loan Refinancing: Appraisal Required vs. No-Appraisal

December 24, 2019 - If you are interested in refinancing your home loan with an FHA mortgage, you may be confused over the rules . Some FHA refinance loans allow cash back to the borrower while others do not. The requirements for such loans will depend on whether there is cash back or not.

Buying a Home in 2020: Low Interest and Foreclosure Rates

December 1, 2019 - Are you thinking about buying a home in 2020? Mortgage loan interest rates on FHA, VA, and conventional home loans were at incredible lows in 2019. Will these trends continue into the new year? While it's possible, it's not safe to assume that current rates and terms will continue.