August 30, 2017
What are my FHA refinance options? That question, fortunately, has many answers depending on whether you need to refinance an existing FHA mortgage or refinance a non-FHA loan. The options include cash-out and no-cash out refinancing for both FHA and non-FHA loans, plus rehab mortgage options and more.
Cash-Out and No Cash-Out FHA Refinance Loans
FHA refinancing is possible with cash-out or no cash-out loans no matter what kind of mortgage you currently have-FHA, conventional, VA, or other non-FHA mortgage. Borrowers do not have to stay with the original lender for these refinance loan transactions. You are free to shop for a new participating FHA lender to refinance.
Cash-out and no cash-out refinance loans will require a new credit check and appraisal.
FHA Streamline Refinancing
This type of FHA refinance option is open to those with existing FHA mortgages and normally carries a requirement that the borrower get some form of “tangible benefit” from the new loan as defined in the FHA loan handbook.
This benefit can be in the form of lower interest rates, lower mortgage payments, or transitioning out of an adjustable rate mortgage into a fixed rate loan. FHA Streamline Refinancing has no FHA-required credit check or appraisal. Your lender may require one depending on circumstances and lender standards.
FHA Rehab Loans
FHA rehab loans are also known as FHA 203(k) for standard rehab projects and the FHA 203(h) loan for properties damaged in major disasters in federally declared disaster areas. Both the 203(k) and the 203(h) loan are available as new purchase loans and refinance loans.
You can apply for the “standard” 203(k) rehab loan to refinance, but qualified borrowers are also permitted to use the FHA 203(h) refinance loan together with an 203(k). Your lender will explain what it takes to qualify to use both, but in general the property must meet FHA criteria for the 203(h) disaster loan.
These FHA refinance loans will require a credit check. Rules for this may differ for those applying for 203(h) rehab loans in federally declared major disaster areas, but for the standards FHA 203(k) rehab loan, typical loan processing requirements will apply. 203(k) rehab loans come in two different forms-one for smaller projects with a lower loan amount, and one for larger projects. Appraisal and inspection rules may vary depending on lender standards, state law, or building code.
Talk to a participating loan officer to explore your FHA refinance loan options.
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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