FHA Loan Refinance
If you own a home and you are looking for a refinance mortgage, an FHA loan refinance may be right for you if you are looking for lower closing costs and/or easier credit qualifying.
There are two types of FHA refinance loans: FHA Streamline and FHA Cash Out Refinance.
If you have built up equity in your home and your financial situation may benefit by access to extra cash, you may want to consider an FHA Cash Out Refinance. You may be able to qualify for this type of loan even if you currently have a conventional loan. Depending on market conditions and how much equity you have in your home, you may get a lower mortgage rate as well.
If you are not looking to take out cash when you refinance your mortgage, you may want to consider an FHA Streamline Refinance.
FHA Streamline Refinance
Streamline is a term describing loans that require less paperwork from the borrower because less documentation is needed during underwriting.
Here’s what you need to know about an FHA Streamline Refinance:
- The refinancing process is generally faster and easier, and no appraisal is required
- Verification of income or credit may not be required
- However, you will be able to obtain very little or no cash from an FHA Streamline Refinance
If you currently have an FHA loan, you may be able to reduce your mortgage insurance premium (MIP) with an FHA Streamline Refinance because the FHA reduced its MIP rates in 2015.
FHA Streamline Refinance Eligibility Requirements
One mission of the Federal Housing Administration (FHA) is to maintain and expand homeownership. As a result, the FHA wants to encourage homeowners to refinance when they can financially benefit from doing so. This is an important feature of the FHA Streamline Refinance program.
The eligibility requirements of an FHA Streamline Refinance are:
- Your mortgage must already be an FHA loan
- You must be current on making your mortgage payments (not delinquent)
- You must get a tangible benefit from refinancing; either by reducing your interest rate and/or obtaining savings over the life of your loan by changing loan terms
Due to loan amount restrictions, an FHA Streamline Refinance may require out-of-pocket funds at closing equal to approximately one month’s mortgage payment. Freedom Mortgage also offers other options that do not required any funds out-of-pocket (other than possible escrow shortages or late fees.)
One way to estimate whether or not you can benefit from an FHA mortgage refinance is to use our Refinance Mortgage Calculator.
Given that interest rates fluctuate daily and FHA guidelines are always subject to change, the best way to determine whether or not an FHA refinance can benefit you is to call an FHA-approved lender and get up-to-the-minute information.
Freedom Mortgage is an FHA-approved lender with more than 25 years of experience, serving many thousands of customers nationwide, day after day. Our loan specialists can explain your refinance mortgage options, including FHA Streamline Refinance and FHA Cash Out Refinance.