September 11, 2014
So you have a home loan–a conventional mortgage, VA loan or even an existing FHA loan–and you want to refinance. Some borrowers go right for their existing lender to apply, even if the interest rate or terms & conditions aren’t as advantageous as those offered elsewhere. Are you REQUIRED to use your existing lender for a refinance loan?
No. Borrowers are free to refinance an existing home loan with another financial institution. This is true even of an existing FHA mortgage that you might be paying on–if you wish to refinance, you can search for another participating FHA lender who can work with you and your circumstances.
The key to getting a better deal on your interest rate and terms is to comparison shop between your existing lender and any other participating FHA lenders you wish to consider. Another important thing to remember is that you can take the rate information you get and go back to your existing lender and ask if those rates and terms could be matched.
In cases where you want to use another lender, you’ll naturally be asked to provide the relevant details of your current loan including the loan amount, payoff date, remaining balance, etc. It’s also important to remember that in cases where you want to refinance early in the mortgage, FHA loan rules require you to have made at least six payments and six months should have elapsed before your next application.
That is known as the seasoning period for FHA loans and while borrowers may have reasons for wanting to refinance early in the mortgage, the six months/six payments rule is non-negotiable.
You don’t have to stay with your current lender to refinance a home loan–shopping around could be the best way to get into a lower payment, better interest rate, etc.
Do you have questions about FHA 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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