December 7, 2015
Are you thinking about refinancing your home loan? There are many things you will want to consider in the planning stages that can help speed you to the application stage of your new loan. Here are some basics you should consider when saving and planning to refinance:
The Type of Refinancing You Need
Are you searching for a Streamline Refinance for your existing FHA mortgage loan? Or so you need to refinance from a conventional or other non-FHA mortgage into an FHA home loan? Do you want cash out? Or do you just need lower payments? All these factors are important to consider when choosing the FHA loan product that is right for you. An FHA Streamline has different rules and requirements than an FHA Cash-Out Refinancing loan. Know the differences before you apply.
Your Credit
What is the state of your credit since the original loan application? If you have missed payments or have late payments on your credit record in the last 12 months, consider delaying the date of your application until you can come to the FHA refinance loan process with 12 full months of on-time, reliable payments on your record. Borrowers who are refinancing in order to catch up on missed payments will need to discuss their circumstances with the lender to see what type of refinance loan is open in such cases.
Your Financial Goals
Refinancing is often done with a specific financial goal in mind–do you seek lower payments? Do you want to refinance and simultaneously make upgrades or improvements in the home? Are the upgrades you are looking to get related to energy efficiency? An FHA Energy Efficient Mortgage may be an option to consider in such cases–don’t overlook this type of “add-on” to your loan if that’s the end result you have in mind for a cash-out refinance loan.
The Term Of Your New Loan
15-year and 30-year loan packages are standard FHA loan terms–do you want a shorter loan term? Do you need a 30-year FHA refinancing loan? Discuss the options you want with your loan officer. In most cases there should never be a penalty for early payoff with an FHA mortgage loan, so if you do choose a longer loan term, that’s one thing to keep in mind when planning your budget.
Your Budget
Remember that for certain types of FHA refinancing loans, you’ll need to pay for a new appraisal and credit check. With a new appraisal comes the potential for a required correction or repair to the property depending on the outcome of the appraisal. It’s best to anticipate having to pay for a follow-up inspection should such corrections be deemed necessary.
Also, don’t forget to also save up for any discount points you may wish to pay for up front as well as closing costs and other fees associated with the new loan.
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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