December 2, 2015
Are you considering refinancing your dream home? Are you looking for cash out, lower payments, or a lower interest rate? Your financial needs and goals will dictate the type of FHA refinance loan you should apply for. Knowing which type of loan you need is an important part of the refinance preparation process.
Borrowers who have existing conventional, VA, or other non-FHA home loans can refinance into an FHA mortgage loan using an FHA cash-out or non-cash out option. This type of refinancing requires both a new appraisal and a new credit check.
To get cash out on such a loan, you’ll need to have enough money left over in the new loan after paying off the old mortgage plus any fees and expenses associated with the loan. Borrowers who apply for this type of FHA refinancing are responsible for paying for the new appraisal and credit check. (The fees for both are limited to actual services rendered, and markups in this area are not allowed).
For borrowers with existing FHA mortgages and who want to reduce their monthly mortgage payments, interest rates, or both (depending on circumstances), the FHA Streamline Refinance loan is an excellent choice. This type of refinancing is specifically designed to lower payments or interest rates.
Borrowers should know that certain add-ons to this refinance loan can actually raise monthly payments, so it’s very important to do the math ahead of time to see how adding features like an Energy Efficient Mortgage could affect the transaction as a whole.
FHA Streamline Refinance loans have no FHA required appraisal or credit check. However, the participating lender may require one or both, regardless, and this is permitted under FHA loan rules.
Preparing for a refinance loan credit check is a lot like preparing for your initial home loan application. Be sure to bring 12 months of on time payments on all financial obligations to the bargaining table when you sit down with the lender. This is very important when it comes to loan approval.
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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