FHA Refinance
Learn About Your Mortgage Options
Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.
FHA Cash-Out Refinance
This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash-Out Refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe. To be eligible for an FHA cash-out refinance, borrowers will need at least 15 percent equity in the property based on a new appraisal.
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.
- Credit Score Guidelines
Applicants must have a minimum credit score of 580 to qualify for an FHA cash-out refinance. - Debt-to-Income Ratio Guidelines
The FHA has guidelines regarding an applicant's debt-to-income ratio in order to keep people from entering into mortgage agreements that they cannot afford. - Maximum Loan-to-Value Guidelines
FHA Cash-Out Refinance loans have a maximum loan-to-value of 85 percent of the home's current value. - Payment History Requirements
Documentation is required to prove that the borrower has made all the monthly payments for the previous 12 months.
- How Soon Can I Cash-Out Refinance an FHA Loan?
- FHA Refinance Loan Questions and Answers
- How to Prepare for an FHA Cash-Out Refinance Loan
FHA Streamline Refinance
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamline Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
- Your Current Mortgage Must Already Be FHA-Insured
While refinancing from a conventional loan to one backed by the FHA is possible, the Streamline option is only available to borrowers with an existing FHA loan. - The Mortgage Must Be Current
This means that you have not missed any payments. You must have made at least 6 monthly payments and have had your existing mortgage for a minimum of 210 days before you can apply for the Streamline Refinance option. - There Must Be a Net Tangible Benefit
The FHA actually requires that there be some advantage for the borrower if they go ahead with a Streamline Refinance.
- Streamlined FHA 203(k) Rehabilitation Loans
- FHA Refinance Loan Basics
- FHA Streamline Refinancing: Appraisal Required?
FHA Simple Refinance
The FHA Simple Refinance allows homeowners to go from their current FHA Loan into a new one, whether it's a fixed-rate loan or an ARM. This refinance is the most straightforward, and there is no option for cash-out. Lenders will require a credit qualification, income, and assets to ensure the borrower meets the loan requirements.
Homeowners should think about several factors while considering the benefits of refinancing their mortgages. Below are some of the most common goals borrowers have when moving forward with their refinance options.
- Lower Monthly Payments
Refinancing your home gives you the opportunity to get a lower interest rate on your mortgage, which means smaller monthly payments. - Switch to a Fixed Rate Loan
Even by switching from an ARM to fixed rate mortgage, you could avoid higher monthly payments and will have a set amount to pay every month. - Earn Cash on Your Home Equity
It allows you to borrow cash against your home equity in the case of large upcoming expenses. By liquidating this equity you can get cash-in-hand.
- FHA Simple Refinance and the Rate-And-Term Refi
- Calculating Your Monthly FHA Loan Mortgage Payment
- Basic Eligibility Rules for FHA Mortgages
FHA Rehab Mortgages
Many buyers decide to purchase a home that is significantly older, and not in the best condition. The FHA 203(k) Rehabilitation Loan enables borrowers to finance the purchase or refinance of a home, along with its renovation or "rehabilitation" of the property. HUD allows Section 203(k) financing to be used for:
- Structural alterations and reconstruction
- Modernization and improvements to the home's function
- Elimination of health and safety hazards
- Changes that improve appearance and eliminate obsolescence
- Reconditioning or replacing plumbing; installing a well and/or septic system
- Adding or replacing roofing, gutters, and downspouts
- Adding or replacing floors and/or floor treatments
- Major landscape work and site improvements
- Enhancing accessibility for a disabled person
- Making energy conservation improvements
- Rules You Should Know About FHA Rehab Loans
- FHA Rehab Loans for Federal Disaster Areas
- FHA Limited Rehab Loans for Smaller Projects
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FHA Loan Articles and Mortgage News
September 12, 2018 - In 2015, the FHA and HUD published a final rule doing away with regulations for an obsolete home loan program known as the Section 235 mortgage. Section 235 mortgages were created in 1968 with the passage of the Housing and Urban Development Act .
September 11, 2018 - FHA cash-out refinance loans do require an appraisal, and borrowers who live in housing markets that are on the rise should check to see how far property values have increased since the last appraisal.
September 9, 2018 - Should I apply for an FHA adjustable rate mortgage? The FHA ARM loan, as it is commonly called, can be a useful tool for the right circumstances. It’s important to know how FHA ARM loans work and how the changes to the FHA loan interest rate are handled.
September 2, 2018 - Are you ready to start planning for an FHA home loan? If you haven’t seen your credit report yet, and don’t have a budget for your down payment, these are among the first areas to start working on once you know you’re going to become a house hunter.
September 1, 2018 - Home loan interest rate issues can be confusing to some, especially if you have never purchased a home before. What should the typical borrower know about FHA home loan interest rates? There are several factors that can affect the rate you are offered and why.
August 26, 2018 - FHA Adjustable Rate Mortgages, also known as FHA ARM loans, are a bit more complex than their fixed-rate mortgage counterparts. There are some frequently asked questions about FHA ARM loans borrowers should know the answers to when they begin planning for their new home loan.
August 25, 2018 - If you are thinking of buying a home and want to apply for an FHA mortgage to do so, it’s a very good idea to review your credit report to make sure there is no information about late or missed mortgage payments, rent payments, and even credit card or utility bill payments.
August 19, 2018 - FHA cash-out refinance money is good for any purpose the borrower wants to use it for; the cash-out refi loan is different in that respect than a refinance loan to rehab a house (FHA 203(k) loans, for example) or to purchase and rehab a home.
August 10, 2018 - The first thing to think about before you start getting ready to apply for an FHA mortgage to refinance and remodel is how old your current mortgage loan is. The longer you have been making payments, the more buying power you might have with a new loan.
July 23, 2018 - New purchase loans require the lender to determine the fair market value of the property. The appraisal helps the borrower know whether the asking price of the home is higher than it should be compared to similar homes in the area, but the FHA appraisal is not a tool for the borrower.
FHA.com Reviews
FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!
