FHA Refinance Loans Near 50 Year Lows!
Learn About Your FHA Refi Options
Mortgage rates have recently dropped to a level not seen in almost half a century. This may be the best time you'll see to refinance your home loan. If you're currently in a 30-year mortgage, consider the advantages of moving into a 15-year loan. If you have a existing mortgage at 4% or higher, it probably makes sense to refinance.
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 now.
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 20 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 80 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
FHA Reverse Mortgages
An FHA reverse mortgage is designed for homeowners age 62 and older. It allows the borrower to convert equity in the home into income or a line of credit. The FHA reverse mortgage loan is also known as a Home Equity Conversion Mortgage (HECM), and is paid back when the homeowner no longer occupies the property.
There are requirements for an FHA-insured reverse mortgage or HECM;
- The loan is based on the age of the youngest borrower if there are co-signers.
- Homeowners are required to get consumer counseling and education before a HECM loan is approved.
- Borrowers must own and live on the property as the primary residence.
- How to Qualify for an FHA Reverse Mortgage
- FHA Reverse Mortgage Basics
- Common Questions About Home Equity Conversion Mortgages
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FHA Loan Articles and Mortgage News
March 5, 2021 - HUD originally announced a COVID-19-related foreclosure moratorium in March of 2020. Since that time the agency extended the deadline to apply for relief multiple times. Extended foreclosure and eviction moratoriums now expire June 30, 2021.
March 2, 2021 - With a 2021 winter disaster to deal with, home owners across many states including Texas, Oklahoma, and elsewhere are looking at home repairs and renovation as part of disaster recovery. Other homeowners may need a home repair or upgrade no matter what kind of winter they are having.
March 1, 2021 - Those with FHA mortgages who own homes in the state of Texas are getting help from the federal government in the wake of deadly winter storms in the area affecting some half a million homeowners in the Lone Star State.
February 26, 2021 - If you have been looking at home loan interest rates and considering your refinance loan options, it’s a good idea to take some steps that will help you get closer to refi loan approval. It's a good idea to shop around and get all the information possible about how much a refinance loan will cost.
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.
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.
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.
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.
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.
January 25, 2021 - Do you know how your credit score affects your home loan? The most obvious way your credit score affects your home loan is basic approval or denial of the loan application. If you don’t have a high enough credit score to meet the lender’s baseline standards, you won’t be approved for the loan.
