December 28, 2015
Are you considering refinancing your home in 2016? There are several things you’ll want to consider planning, budgeting, or saving for in the new year. Having plans to examine these important issues connected to an FHA refinance loan can help you get organized and stay organized in the new year. Those issues include deciding on the type of loan, purchasing discount points, and the possibility of applying for extra funds to make energy efficient improvements in the home.
For starters, it’s good to consider the type of refinancing you are interested in. Do you want lower payments and/or interest rates? Consider a Streamline FHA Refinance loan. Streamline refinances don’t have an FHA-required credit check or appraisal (though your lender is free to require one or both).
For non-credit qualifying and/or no-appraisal FHA Streamlines, the borrower won’t have to budget for the appraisal or credit check unless the lender’s policies require them. Streamline refinances allow the lender to use the same credit qualifying data submitted with your original mortgage loan.
One thing borrowers should keep in mind about FHA Streamline loans–this refi option is only for borrowers with existing FHA mortgages, so if you have a conventional loan or any other type of non-FHA mortgage, you’ll need to consider FHA cash-out or no-cash-out refinancing instead.
And what about those borrowers who aren’t currently paying on FHA mortgages? Did you know that you can refinance out of your conventional, VA or other non-FHA mortgage into an FHA home loan?
These types of refinance loans require a credit check and a new appraisal so you will need to prepare for both. FHA refinancing for cash and non-cash out loans permit the borrower to purchase discount points that can lower your interest rate based on the agreement you make with the lender. Talk to your loan officer about discount points and how they work.
Refinance loans that require an appraisal can include rehab mortgages such as the FHA 203(k). In these cases, an appraisal may require the repairs or corrections to be implemented with the rehab loan to be inspected for compliance with FHA minimum standards and/or state or local building code. Any compliance inspections would be paid for by the borrower, so it’s good to have a discussion with your loan officer about how this process works and what might be typical in terms of costs for the inspection.
A refinance loan for rehab could require you to supply additional information if you are making repairs-especially if you are doing the work yourself. Be ready to have a conversation with your lender about any additional paperwork or documentation that may be needed in such cases.
Most FHA refinance loans may be eligible to add extra funds to make energy efficient improvements or upgrades in the home, even if the refinance loan isn’t technically a rehab loan. Talk to your lender about the FHA Energy Efficient Mortgage program and how it may apply to the refinance loan you seek.
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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