January 24, 2022
No two refinance loan programs are exactly identical–depending on the program and the lender you may find terms and conditions vary.
For example, where FHA Home Equity Conversion Mortgages are concerned, there is a minimum age you must be (62 or older) to qualify. That is NOT true of FHA Cash-Out Refinancing or FHA Simple Refinance loans.
What’s more, FHA refinance loans do not have the same terms and conditions.
For example, these refinance loans may, depending on the participating lender, allow you to refinance an adjustable-rate mortgage (ARM) into a fixed rate but also may permit you to go from one adjustable-rate mortgage to a new ARM. And that loan could be a 15-year or a 30-year loan depending on your financial needs and goals.
There are many choices to make when picking your refi loan. Do you want to refinance and renovate at the same time? Do you want to get cashback at closing?
These specific loan choices and their details will vary–it is smart to shop around for a lender as well as a home loan. Otherwise, how will you know what the most competitive rates and terms open to you might be?
You do not have to use your existing lender to refinance your FHA mortgage.
You are also not required to have an existing FHA mortgage for certain types of FHA refinance loans. What kinds of FHA refi options allow this? One good example; FHA cash-out and no cash-out refinancing can be applied to any existing mortgage loan whether conventional, VA, or otherwise non-FHA mortgage
Some FHA refi options ARE restricted to existing FHA loans. An FHA Streamline Refinancing loan is one–this is a no-cash-out refinance for those who currently have an FHA home loan.
And the FHA Reverse Mortgage (also known as the Home Equity Conversion Mortgage or HECM) program is an option for borrowers age 62 or older, but the requirements of this loan include either owning your home or being very close to owning it outright.
The FHA HECM option lets borrowers take cashback on the loan and make no monthly mortgage payments.
Your HECM loan in these cases is due in full when the borrower dies or sells the property. FHA home loan rules say those applying for HECM loans must take a Reverse Mortgage counseling course or session as a condition of loan approval.
There is also an FHA 203(k) Rehabilitation Loan for those who want to refinance their home and make home improvements or renovations at the same time.
There is no age restriction on such loans, but the cash proceeds cannot be used “for any purpose” and are restricted to approved renovation projects and their related expenses.
Never forget that the FHA loan program encourages borrowers to shop around for the best rates, most favorable terms, and a lender that can work with your credit scores, financial needs, and goals.
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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