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
July 1, 2019 - With rates so low, what do you need to know about refinancing to get a better mortgage rate? If you are shopping around for a loan and have not yet applied for a refinance, the rates you see today may change tomorrow.
June 24, 2019 - If you are a homeowner experiencing financial difficulty, you have options with your mortgage that can help you get into a lower interest rate or monthly payment. But borrowers should be careful not to let financial hardship spoil their chances to get a more affordable mortgage.
June 21, 2019 - FHA refinance loans are for single-family, owner-occupied residences used as a borrower’s home. Your original home loan may not be an FHA mortgage, but you can still refinance your existing non-FHA mortgage into an FHA home loan.
June 18, 2019 - Some kinds of FHA refinance options are intended for borrowers with existing FHA mortgages, but those with non-FHA mortgages have FHA refinance help waiting, too. What does it mean to refinance your existing home loan?
June 16, 2019 - Are you looking for a home to purchase with an FHA mortgage? Issues new to some first-time borrowers include FHA loan limits, and the maximum loan amount you can apply for. FHA home loans feature a maximum loan amount, which may vary.
June 15, 2019 - The FHA home loan program offers consumers a government-backed home loan designed to be more affordable than comparable conventional mortgages-there is a lower down payment requirement and credit terms can be more forgiving, too.
June 12, 2019 - FICO score issues are a common source of stress to potential FHA borrowers. Everyone wants to know if their FICO scores are high enough to qualify for an FHA mortgage. Is it possible to qualify for an FHA loan or refinance loan with credit scores from 500 to 579? Or are higher scores required?
June 11, 2019 - The kind of FHA refinance loan you get will depend on what your financial needs and goals are; some borrowers want cash back, others need a lower mortgage payment, and some just want to get out of an adjustable rate mortgage into the predictability of a fixed-rate FHA mortgage.
June 10, 2019 - Lots of personal finance blogs, real estate websites, and other publications are discussing FHA refinance loan options in recent weeks. Borrowers with existing mortgages may do well to look at refinance loans in the current rate environment.
June 1, 2019 - FHA refinance loans can be used in a variety of ways, but you should know the rules before you commit as there are a variety of refinance loan options that can be used most effectively for specific needs. Know the facts about FHA refi loans before you apply and get the RIGHT loan for you.
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!
