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FHA refinance loans and the FHA streamline refinance allow borrowers to reduce the interest rate on their current mortgages. Refinancing your home loan involves the same process and work as you put into your first mortgage.

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August 17, 2018
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FHA Refinance

Learn About Your Mortgage Options

FHA Refinance 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

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.



FHA Streamline Refinance

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.



FHA Simple Refinance

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 Rehab 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



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FHA Loan Articles and Mortgage News

How Should I Use My FHA Cash-Out Refinance Money?

August 12, 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.

How to Remodel Your Home With an FHA Mortgage

August 4, 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.

What Is an FHA Home Appraisal?

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.

Debt Ratios and Mortgages for Disaster Victims

July 20, 2018 - FHA 203(h) disaster relief loans have similar qualification requirements as standard FHA purchase or refinance loans, but offer more lenient credit and down payment requirements due to the circumstances surrounding the loan application.

FHA Loan Approval and Income Stability Issues

July 16, 2018 - If you are looking for a home to buy with an FHA home loan and are among the growing number of Americans working in the gig economy, you may wonder if your income is acceptable to a lender. 

FHA Home Loans and Your Credit: Inaccurate Information

July 13, 2018 - If you are considering an FHA home loan or an FHA cash-out refinance, it’s best to start examining your credit scores and credit report information as early as possible in the planning stages. 

FHA Reverse Mortgages for Older Borrowers

July 7, 2018 - FHA reverse mortgages are a home loan options that financially qualified borrowers aged 62 or older can consider if they either own their home or are very close to paying off their mortgage loan. Borrowers may consider them to convert the home’s equity into cash for personal needs, renovations, travel or other purchases.

FHA Cash-Out Refinancing and Rising Property Values

June 27, 2018 - FHA cash-out refinancing for homes with rising property values could make cash available for a wide variety of purposes; paying down student loans, making home improvements, or even paying for vacations and related expenses.

Mistakes Made By FHA Loan Applicants

June 24, 2018 - Do you want to avoid some common mistakes that new home loan applicants make? There are some areas you can address in the planning stages of an FHA home loan or refinance loan that will save you time and possibly even thousands of dollars.

FHA-To-FHA Refinance Loan Rules and Options

June 18, 2018 - Borrowers with existing FHA mortgages often consider refinancing their loans. Some may refinance because they want to get a lower payment or switch the term of their loan to a shorter (15-year refinance loan) or longer (30-year refinance loan) term.

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!