July 29, 2015
Looking for a refinance loan? Do you know what your options are as a homeowner when it comes to refinancing from a non-FHA loan to an FHA mortgage? Or are you in need of an FHA-to-FHA refinance? There are many options available, some of which may surprise you. Did you know there is one type of FHA refinancing which has no FHA-required credit check?
Borrowers who are currently paying on adjustable rate mortgages should take a close look at FHA refinance loan options for a variety of reasons. Those who have non-FHA loans can refinance into fixed rate FHA loans, or refinance into another adjustable rate mortgage (ARM)–FHA loan rules permit both options for qualified borrowers.
Non-FHA borrowers looking to refinance into an FHA mortgage will be required to get a new appraisal and fill out a new credit application, but depending on the market and other factors may find the interest rates on FHA refinance loans to be lower than conventional counterparts.
If you have an existing FHA mortgage loan, you’ll find more options–in addition to being able to apply for cash out or no-cash-out refinancing that requires a new appraisal and/or credit check, you may also be eligible to apply for an FHA Streamline Refinance loan which has no FHA-required appraisal or FHA required credit check. Borrowers should know the lender is free to require one or both, but some borrowers may find they can apply without a new credit check unless the loan meets certain specific conditions.
FHA-to-FHA refinance transactions allow the borrower to refinance into a fixed rate mortgage, or an adjustable rate mortgage. If you are going from ARM to ARM, you will likely be eligible for a new teaser rate (also known as an introductory rate) and the terms of your FHA ARM loan may include more consumer-friendly conditions when it comes to changes in the interest rate.
When it comes to the FHA Streamline Refinance loan program, the borrower is expected to get a tangible benefit from the loan, and refinancing out of an ARM into a fixed rate mortgage is considered one of those benefits. That is an important factor in loan approval for an FHA Streamline loan, so discuss your refinance loan needs with the loan officer to see which program might be best for your situation.
Streamline refinance loans don’t permit cash back to the borrower, so for any type of FHA-to-FHA transaction you want cash back for, the FHA cash-out refinance loan program is the one you should be looking at; cash out loans are available to qualified borrowers for both FHA-to-FHA refinances and conventional-to-FHA.
Do you have questions about FHA loans? Ask us in the comments section. Our responses are always posted in the comments section. Sorry, due to volume, personal replies are not possible.
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.
Browse by Date: