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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 Rates Near 50 Year Low!

Now is the time to drop the interest rate on your 30-year mortgage or refinance into a 15-year home loan.

FHA Rates for February 27, 2021
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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.

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FHA Refinance Options for Homeowners

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FHA Loan Articles and Mortgage News

Refinance to Get a Lower Rate with an FHA Streamline Refi

February 16, 2021 - Borrowers who went into loan forbearance over COVID-19-related financial issues have several options for mortgage loan relief. Others instead wanted to refinance their mortgages into a lower payment or interest rate in order to reduce the financial pressure on their monthly budgets.

FHA Loan Rates Still Below 3% in the Early Days of the New Year

February 1, 2021 - The fact that rates are still below three percent is great news for anyone who wants to build a home on their own lot, refinance an existing mortgage, purchase a condo unit with an FHA loan or buy a typical suburban home.

Refinance Your Mortgage in 2021

January 29, 2021 - 2021 is THE year for some to refinance. FHA mortgage loan interest rates are reported at a best-execution (which means that ideal borrower qualifications are assumed) 2.30% and while those numbers are bound to change, it’s an indicator of where rates have been so far this year.

What You Need to Know About the Limited 203(k) Rehabilitation Loan

January 28, 2021 - Some borrowers want to buy or refinance a fixer-upper home and that is where the FHA 203(k) Rehabilitation loan and the FHA 203(k) Rehabilitation Refinance loan can help. You can use it to refinance your current home and get money to accomplish FHA and lender-approved upgrades.

Mortgage Loan Interest Rates in Early 2021

January 27, 2021 - Finance blogs and mortgage writers have noted that in recent months mortgage rates have not moved directly in tandem with the ups and downs of Treasuries, but that a correction of sorts would be forthcoming at some point.