October 15, 2015
We’ve written elsewhere about the different types of FHA refinance loans, but we haven’t covered what the new FHA Single Family loan program policy handbook (HUD 4000.1) has to say about them. In many cases, HUD 4000.1 either updates or restates existing policy, and in others the new handbook replaces or supersedes the old policies.
It’s impossible to know every single alteration in FHA loan rules that have been printed in the new handbook, so we’re simply reporting what the new rules say to clear up any confusion over FHA loan rules old and new.
Here’s what HUD 4000.1 has to say about the different types of FHA refinance loans now available: (Remember that not all participating lenders offer each and every type of FHA loan product, so if you don’t find the refinance loan option you’re looking for with one lender, it’s likely another one may offer it and you just need to shop around)
1. No cash-out refinances of FHA-insured and non FHA-insured Mortgages: designed to pay existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance.
2. Cash-out refinances: designed to pull equity out of the Property.
3. Refinances of non FHA-insured Mortgages: available for qualified Borrowers in negative equity positions (Short Refi).
4. Refinances for rehabilitation or repair: also known Section 203(k) refinancing.
All FHA refinance loan applicants must have a minimum credit score of 500 or above, though the lender may require higher FICO scores and often do. Having the minimum FICO score is not a guarantee of loan approval. With certain exceptions, all FHA refinance loan applicants must have a valid Social Security Number and furnish proof of this number to the lender.
FHA refinance loans can be done, depending on the type of refinancing you seek, on FHA or non-FHA properties. The exception to this is for Streamline Refinancing which is for FHA-to-FHA mortgage loans only.
Cash out refinancing requires a new credit check and appraisal. Streamline refinance loans may or may not require one or both of these–it’s up to the lender to decide. But there is no FHA-mandated appraisal or credit check.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It is easy 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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