August 7, 2015
If you are considering a refinance loan, there are many options under the FHA single-family home loan refinance program. You can refinance from a conventional or non-FHA mortgage into an FHA loan, get out of a variable or adjustable rate mortgage into a fixed rate loan, and even refinance with added funds for approved energy-efficient features or upgrades.
FHA home loans allow non-FHA borrowers to refinance using cash-out or no-cash-out refinancing. These types of refinance loans require a new appraisal and credit check. Borrowers should know that even if it’s only been a short amount of time since loan closing, any appraisal used on a home where the loan has closed cannot be re-used for the purpose of a new loan.
Borrowers who want to refinance early should expect to wait until at least six mortgage payments have been made. This is sometimes known as a “seasoning period” and the actual length of time you must wait from the original loan’s closing date may vary depending on the lender.
Borrowers who are already paying on FHA mortgage loans can choose to do cash out refinancing but also have the option of applying for an FHA Streamline Refinance loan, which has no FHA required credit check (except under specific circumstances) or new appraisal. Your lender may require one or both, but the FHA permits Streamline Refinances without them where permitted by the lender.
For most refinance loans except Streamline Refinancing, borrowers should expect the same type of credit qualifying procedures and appraisal as with the original loan, though when it comes to appraisals, you may find that corrections or repairs could be negotiable depending on the nature of them and the willingness of the lender. Minor issues may not be a barrier to loan approval, though the home may need to be brought into compliance with state/local building code if required.
There will be closing costs associated with refinance loans, and borrowers should prepare for these costs ahead of time. Some lenders may offer the opportunity to include certain costs into certain refinance loans–ask your loan officer what your options might be for including certain costs into the loan amount where permitted, and how doing so will affect the mortgage payment.
Do you have questions about FHA refinance 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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