February 20, 2018
Should I refinance with an FHA mortgage? There are many reasons why you might want to consider refinancing, especially if you are looking for a more competitive interest rate or need to move into a fixed rate loan instead of continuing with an adjustable rate mortgage.
I Want To Get A Different Interest Rate
Typically, on paper FHA mortgage loans do offer more competitive interest rate and it is possible for borrowers to get access to better rates with an FHA loan. But there is a very important factor here to consider-your credit history and FICO score may dictate your access to the most competitive rates.
If you have excellent credit, your chances of a more competitive rate are better. If you have lower FICO scores or represent an increased risk for the lender, higher rates may be offered. That is very important to keep in mind both for the planning stages of your refinance loan and for the application stage.
I Want To Get Cash Back On My Refinance Loan
FHA mortgage loans include a Cash-Out refinance loan option, which is available for both non-FHA and FHA mortgages alike. The amount of the cash back will depend on how much is left over after your loan expenses and the original mortgage is paid off.
Cash-out refinance loans require both a new appraisal and a new credit check. Your lender will discuss rates and terms with you and also how much to realistically expect back in cash with your specific circumstances.
I Want To Get Out Of An Adjustable Rate Mortgage
Regardless of whether you have an FHA or a non-FHA mortgage, it’s possible to refinance into a fixed rate home loan using an FHA cash out or no cash out refinance loan. The longer you have owned your home, the more potential cash back you could qualify for. These loans require a new credit check and appraisal.
I Have An Existing FHA Mortgage But Want A Lower Rate
Borrowers with existing FHA loans can apply for an FHA Streamline Refinance loan which normally requires some tangible benefit to the borrower such as a lower monthly payment, refinancing out of an ARM into a fixed-rate mortgage, lower interest rate, etc.
FHA loan rules do not require a credit check or appraisal for these refi loans (with certain exceptions); your lender may require one anyway. The “certain exceptions” include situations where add-ons to the loan increase the monthly payment beyond a certain threshold. Lender standards may also apply.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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