February 3, 2015
If you are considering refinancing a home loan using the FHA Cash Out Refinance Loan option, there are a few things to keep in mind about your FHA refinance loan options when you’re planning, budgeting, and saving for the loan.
The first thing to remember is that you can refinance an FHA or non-FHA home loan with a Cash Out Refinance loan. FHA loan rules permit this and you don’t have to use the same lender you applied for the original home loan with; shopping around for the most advantageous refinance loan interest rates and terms is always a good idea.
That means if your current lender is not a participating FHA lender, you can shop around to find one that does participate in the FHA loan program and is willing to offer a cash our refinance.
When in the preparation stages for the FHA refinance loan, remember that there are loan expenses and closing costs to budget for. You’ll need to save money for the expense of your lender pulling your credit reports and there will also be an appraisal required on the property. FHA cash out refinance loans always require a new appraisal.
Borrowers should not count on being able to use the appraisal that was performed when you originally purchased the property–the appraisal on a loan that has closed cannot be used again.
In the planning stages, it’s best to work on your payment history–come to the FHA refinance loan process with no fewer than 12 months of on-time payment on all your financial obligations and avoid taking out new lines of credit during this time. You should also work on reducing the amount of your current outstanding debt as much as is reasonable since your lender will be examining your debt-to-income ratio.
Preparing for a new home loan can take some time, but the results are well worth the effort to make yourself more creditworthy.
Do you have a question about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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