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
July 21, 2020 - Consumers are warned repeatedly to monitor their credit for signs of identity theft, erroneous information, etc. Some future home owners already do this, but the concept is new to others. Why is credit monitoring a crucial part of your preparation before applying for an FHA mortgage?
July 11, 2020 - If you are in the planning stages of your home loan, you’ll definitely want to pull your credit report and review the contents. If you have never seen your credit report before, you are not ready to fill out a home loan application.
July 7, 2020 - Do you know what your credit report says about you at this moment? If not, you aren’t truly prepared for your home loan application. Those who have not pulled their credit reports should not fill out loan paperwork.
July 4, 2020 - In the earliest part of 2020, mortgage loan interest rates experienced a great deal of volatility. Unprecedented low mortgage rates have grabbed headlines and have sparked a flood of refinance loan applications and many renters are seriously considering becoming homeowners.
June 28, 2020 - The FHA reverse mortgage loan program is known as the Home Equity Conversion Mortgage or HECM for short. Lots of people are interested in reverse mortgages--but who qualifies for the FHA version of the reverse mortgage and how do you know if your home is eligible for the loan?
June 25, 2020 - Refinancing can save you money in interest payments over the long term. It can also provide a lower monthly payment or result in cash back to the borrower once the original loan has been paid off and the associated closing costs dealt with.
June 20, 2020 - Comparing rates is a very good thing to do when shopping around for a lender but knowing why government-backed loans such as FHA mortgages, USDA loans and VA loans have lower interest rates for highly qualified borrowers is an important factor.
June 18, 2020 - In the second week of June, FHA mortgage rates were reported below three percent--something that in years past would have been considered surprising, but with the 2020 rollercoaster ride it’s not so strange to those used to watching the markets.
June 12, 2020 - What does it mean for mortgage rates to drop so low? There are a variety of factors that have contributed to these low rates but the most important thing to understand is that those numbers are subject to change--sometimes quickly, sometimes not.
June 9, 2020 - There has been a lot of volatility in mortgage loan interest rates since March 2020, and at the time of this writing, FHA mortgage loan interest rates have technically dipped below the three percent range again, though for how long is not certain.
