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FHA Refinance Loans: 10 Things To Know

139If you are considering your options with an FHA refinance loan, here are ten tips to help you decide which type of refinancing is right for you.

FHA Refinancing For Non-FHA Loans

Borrowers do not have to be in an FHA mortgage loan already to be eligible for certain types of FHA refinance loans. Your VA loan, conventional, even sub-prime mortgages may be able to be refinanced into an FHA loan. FHA refinance loans feature cash-out and non-cash out options for existing FHA and non-FHA mortgages.

Refinancing And Repairs

Your FHA refinance loan options include rehab/repair loans under the 203 program. FHA 203(k) and 203(h) mortgages have long been a part of the FHA loan options available from participating lenders. If your home has been damaged in a natural disaster, or you just want to do general rehabilitation work, FHA refinance loan options permit qualified borrowers to do so. Be sure to mention your rehab/repair needs to the loan officer to learn what’s open to you.

Streamline Refinance Options

Existing FHA loans have a Streamline Refinance option available to qualified borrowers that allows you to get into a lower mortgage loan interest rate or monthly payment. Or both.

Cash-Out FHA Refinancing

FHA refinance loans that feature cash out will always require a new credit check and appraisal. You should approach this type of refinancing the way you did your original mortgage and check credit scores, loan repayment history, etc.

FHA Refinancing And Occupancy

FHA refinance loans have an occupancy requirement the same as for new purchase mortgages. You will be required to use the property refinanced with an FHA mortgage as your primary residence.

Refinance Loans And Credit Checks

Any transaction that features cash back to the borrower will require a new credit check. FHA Streamline refinancing, which does not allow cash back, has no FHA-required credit check, but your lender might require one anyway and is permitted to do so.

Refinancing And Interest Rates

The interest rate on your FHA refinance loan must be negotiated between you and the lender, the same as with your original mortgage loan. The FHA does not set or regulate interest rates.

Refinancing And Closing Costs

Refinance loans have costs the same as new purchase mortgages. There may be some costs you can finance, others may need to be paid up front. Lender standards, state law, and other factors may affect how this part of your transaction goes, so it’s important to discuss these expenses with the lender to see what may apply in your specific circumstances.

Refinance With A New Lender

You do NOT have to stay with the original lender to refinance your mortgage into an FHA loan.

Refinance Loan Planning

It’s a good idea to know what kind of refinancing you need-cash out, no cash out, Streamline, a rehab loan, etc. But if you are not sure what the best choice might be, you can have a conversation with a loan officer who can explain program options, requirements, and even add-ons to the loan such as an FHA Energy Efficient Mortgage. You don’t have to commit to a loan the day you speak to the loan officer about these options.

Joe Wallace - Staff Writer

By Joe Wallace

October 20, 2016

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 for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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