refinance mortgage fha loan

Refinance mortgage fha loan Basic

In order to refinance an FHA loan, several rules apply.

* The loan must already be an FHA loan. In other words, you cannot refinance a conventional mortgage into an FHA loan.

* The current loan must be in good standing and not be delinquent.

* The new loan must lower the borrower’s monthly principal and interest payments.

* There cannot be cash-out refinancing if using the streamline process. (The streamline process refers to the amount of work done by the lender. Streamlined refinancing means less documentation and underwriting done by the lender, but it does not necessarily mean there are no costs.)

Some refinanced loans are available at no cost in exchange for a higher interest rate. Also, closing costs can sometimes be rolled into the new mortgage. If you are considering refinancing, it is important to remember the closing costs involved and to look at your options for paying them to be sure that it is worth it to refinance your FHA loan.

Refinance mortgage fha loan Advantage

The FHA guarantees your loan through approved FHA lenders, which not only makes it easier to qualify for a home loan, it can also save you money each month. A guaranteed loan is a win-win situation for both parties, and it can lead to a lower interest rate for the borrow and less risk for the lender. The best way to start the FHA Loan process is by answering a few simple questions so we can connect you with an FHA Specialist today!

You do not have to have perfect credit to refinance with a FHA Loan. The FHA requires certain standards order to offer you a loan guarantee, but the lender is still guaranteed their money in case of foreclosure, so they are more likely to fund the loan even if the borrower's credit is not ideal. Since each situation is unique, let a FHA specialist prepare a personal analysis for you.

You can have no down payment or a very low down payment, and still get a mortgage loan. Most traditional lenders require a minimum down payment, which preferably is around 20% of the purchase price of the home. FHA Loans only require 3%, and this required portion can be a gift to you. Many lenders don't allow gifted funds to be used for down payments on a mortgage loan, but a FHA Loan would allow you to do so. This means that you can borrow the down payment from a friend or relative, or use a down payment gift program, like AmeriDream, that will give you the money for a free down payment on your home. If you are refinancing, you would be able to take more cash out from your home, or refinance sooner, even if you have a very small amount of equity built up in your home.

You may get a much lower interest rate on your refinance mortgage. FHA Loans can offer much better loan terms than traditional mortgage loans because the loans are guaranteed by the federal government, so there is almost no risk involved. Because of the guarantee, lenders are more secure with the loan, and can offer lower long-term fixed interest rates and fewer points.