FHA Refinance Loans
FHA loans are not just for buying a home. They can also be used to refinance your home. There are three great refinance options available from the FHA. These are a Rate & Term Refinance, a Cash-out Refinance, and a streamline refinance. Since the streamline refinance is a very different type of loan, it is described here.
FHA Rate & Term Refinance
FHA loans can be used to combine one or more outstanding mortgage loans into a single new loan. This type of loan allows you to borrow up to 97.75% of the home’s current value. By using this program, you can combine higher rate mortgages into one low monthly payment.
Cash Out Refinance
A cash out refinance allows you to use your current equity to take equity out of your property. You can use this equity however you see fit. The proceeds of the loan can be used to pay off other mortgage loans, credit cards, student loans, automobile loans or you can even receive a check at closing to use how you like. This program allows you to borrower 85% of your home’s current value.
Who qualifies for an FHA loan?
Credit: FHA loans offer an easier approval process than other types of loans. The FHA understands that people sometimes make mistakes. Even if you have had past credit problems, you may qualify for a new FHA loan. Prior late payments, bankruptcies, and even foreclosures are permitted, as long as you have subsequently established positive credit. Only a 580 credit score is required to qualify for a new FHA loan.
Income: The FHA does not have any minimum or maximum income requirements. They do require that no more than 31% of your monthly gross income goes towards your mortgage payment and no more than 43% of your income goes to pay all of your monthly debts. Don’t worry if you don’t know how to calculate this or if you are concerned that you are over these ratios. A loan officer can help guide you through the process and many times, we can approve you for a loan even if you exceed the FHA guidelines as long as you have some compensating factors.
Assets: No assets are typically required on a refinance loan.
Property: Most single family, condos, planned urban developments (PUD), townhouses, and even manufactured homes qualify for FHA financing.
Mortgage History: We require that all of your mortgage payments in the last 12 months have been paid on time. It is okay if you paid your payments after the 1st of the month, as long as they were not 30 or more days late.
Why use an FHA loan?
Prior Credit Problems: If you have had some issues in the past that you have resolved, the FHA understands.
Great Refinance Options: Once you are into an FHA loan, you have the option of lowering your rate with world’s easiest refinance, the streamline refinance. This program gives you the option of lowering your rate to the lowest market rate every time rates drop without having to re-qualify.
Government Guaranteed: Since the loan is insured by the FHA, the mortgage servicer is required to originate and service the loan according to FHA’s strict standards. The FHA wants to protect it’s consumers.
How Do I Get Started?
Please contact a loan specialist immediately to get the process started. We can provide you with a no-cost, no-obligation, loan benefit worksheet showing you exactly what we can do for you! There are 3 ways to do this:
- Call us toll free at 800-955-8965
- Fill out our contact form
- Chat live with a loan officer now
There are a few documents we need you to collect to process your loan. Do not worry if you cannot locate all of the documents, we should be able to help you. We will need:
- Drivers License
- 2 Year’s W-2s
- 30 Day’s Paystubs
- Mortgage Note
- Recent Mortgage Statement
- 2 Month’s recent Bank Statements
- Homeowners Insurance Declaration Page or Agent’s contact info