November 24, 2015
When you buy a home with a conventional, FHA, or other type of home loan product, one day you may wish to refinance to take advantage of the equity you’ve built up in the home. An FHA cash-out refinance loan can help you do that. With a little planning you can make the most of your refinance experience.
The first step is to figure out how much time you need to prepare for the loan. There are closing costs, and a new credit application and appraisal will be required. Saving money for the appraisal is a good idea, and if you wish to purchase discount points on your cash out loan you can pay for them up front with reduced stress on your monthly budget if you take enough time to save in advance.
The credit check is problematic for some applicants if they haven’t got a full 12 months of on-time payments on the existing mortgage and other financial obligations. Be sure you have this full 12 months of on-time payments before you apply for best results.
Part of getting ready for the credit check is pulling your credit reports and checking both your FICO scores and your record to insure there are no errors or outdated information. Check with the three major credit reporting agencies: Equifax, TransUnion, and Experian.
This is something all borrowers should do early in the planning stages–if you need to dispute or otherwise correct a credit report, you will need time to do so, and checking four to five months ahead of your loan application may not be enough time to get any required corrections made or disputes settled.
When considering an FHA cash out refinance, it’s good to remember that this type of FHA refinance loan can be taken out on existing FHA loans and non-FHA mortgages alike. You may find refinancing to your advantage in the case of non-FHA mortgages thanks to lower interest rates on FHA loan products than conventional mortgages.
You can always use a mortgage loan calculator online to see how much you might lower your monthly payments (where applicable due to lower interest rates) by refinancing. If you are specifically looking for a lower mortgage payment on an existing FHA loan, an FHA streamline refinance (no cash out) might be a better fit for you.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple 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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