January 13, 2016
If you are thinking about your refinance loan options in 2016, now is a good time to review some FHA refi facts. Planning for an FHA refinance loan is important, and if you start early the same way as preparing for the original purchase of your loan you may save yourself valuable time later on in the process.
It’s important to take enough to time to review your recent credit history, make sure you have no late or missed payments in the 12 months leading up to the loan application, and make sure there are no errors or evidence of identity theft on your credit report.
Here are some basic facts–and fictions–about FHA refinancing:
FACT:
FHA refinance loans are available for existing FHA loans and non-FHA mortgages alike. You can apply for an FHA cash out or no-cash out refinance loan on a conventional, VA, or any other non-FHA mortgage. FHA Streamline Refinancing is for existing FHA loans only, but the cash-out and no-cash-out options may apply for all other types of mortgages.
FICTION:
“FHA Refinance loans don’t include any extra money for repairs or improvements.” This is definitely Not true. You can apply for FHA Energy Efficient Mortgage (EEM) options with both streamline and cash-out/no-cash-out refinance loans, and there are also FHA refinance options under the 203(k) program for rehab purposes. Ask your lender about the FHA 203(k) option if your property needs rehabilitation/repairs.
FACT:
FHA Streamline refinancing has no FHA-required appraisal. The lender is free to require one in any refinance loan situation, but if the lender doesn’t require a new appraisal with your streamline refinance, that’s one less fee to save up for.
FICTION:
“I have to use my current lender to apply for a refinance loan.” This statement is not true. Borrowers can apply for an FHA refinance mortgage loan with any participating FHA lender and it is always good to competitively shop around for an interest rate, even if you wind up using your existing financial institution in the end. An informed borrower is much happier with the end results of the transaction.
FACT:
FHA loans do allow cash back to the borrower for cash-out refinancing, but no money back is permitted for streamline refinancing. Those who need cash back should not apply for streamline refinancing, but FHA cash-out refinancing instead. Cash out refinance loans always require a new credit check and appraisal, so you’ll want to prepare for both by saving, reviewing your credit history, etc.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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