January 12, 2016
Are you considering an FHA refinance loan? Are you concerned about your credit scores, or whether and new loan will require a credit check? There are some important issues to keep in mind about FHA refinancing that can help you in the planning stages of your new loan application.
First, not all FHA refinance loans have an FHA-required credit check. FHA Streamline refinance loans (for existing FHA home loans only) have no FHA requirements for a new credit check though your lender may require one anyway. That is permitted under the rules for FHA refinances.
FHA Streamline refinance loans are intended for owner-occupied homes that were originally purchased with an FHA mortgage. However, the borrower does not have to stay with the original lender that issued the loan. You are free to shop around for a new participating FHA lender to get an FHA Streamline Refinance loan with–this is recommended, especially if you feel you can get a better interest rate elsewhere.
The new financial institution has to be a participating FHA lender, but aside from that there are no restrictions on your shopping around for an FHA Streamline that is most advantageous to you.
When it comes to FHA cash-out refinance loans, borrowers will find that a new credit check is always required. That’s one reason why you will need to start investigating your credit report and FICO scores early in the loan planning stages. If you are unaware of your credit score and the contents of your credit report, you’ll want to see what the lender will see far in advance of your application.
In some cases, the borrower’s FICO scores may affect the loan-to-value ratio of the loan, in others the basic scores may affect your eligibility for certain kinds of refinancing. A borrower who seeks cash out refinancing should strive to come to the lender with the best credit score possible. That’s another reason why it’s so important to plan ahead, start early, and pay on time for all financial responsibilities at least 12 months ahead of your loan application.
If you aren’t sure whether your existing FICO scores are good enough to get approved for an FHA refinance loan, call the FHA directly at 1-800 CALL FHA and request a referral to a local HUD-approved housing counselor who can assist you with advice.
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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