Get ready for your FHA refinance loan in 2018! Are you interested in a lower mortgage payment or interest rate on your home loan? Are you looking to convert the equity you’ve built up in your home into cash?
Or perhaps you want to get out of an adjustable rate mortgage (ARM) and into a fixed rate loan? All of these options are open to financially qualified borrowers who apply for an FHA refinance loan.
How To Prepare For An FHA Refinance Loan In 2018
Many of the same steps you took for your original home loan application will apply when you begin planning for an FHA refinance loan. You’ll want to pull your credit reports are early as possible in the planning stages, and consider active credit monitoring to make sure there are no surprises when it comes time to fill out application paperwork.
You’ll also want to plan for certain expenses related to refinance loans. For example, any refinancing loan that features cash back to the borrower will require a new credit check and appraisal. Both of these cost money and are considered typical expenses associated with refinance loans. Budget for these expenses ahead of time to avoid the financial crunch.
You should also plan to use your credit cards less, pay down existing debt to improve your debt-to-income ratio, and avoid applying for any new credit in the months leading up to your loan application.
Choosing The Right Refinance Loan For You
FHA refinance loan options come in many varieties. Do you have a non-FHA mortgage you want to convert to an FHA loan? FHA cash-out and no cash-out refinance options are available to help you do this. Both of these options may require credit checks, appraisals, etc.
For existing FHA mortgages, there are options including FHA Streamline Refinancing which has no FHA-required appraisal or credit check.
If the lender chooses to require one or both, you’ll need to discuss that with your loan officer and expect the same type of credit review as with a new purchase mortgage. Remember, the record of your payments for the 12 months leading up to the loan application is extremely important.
Both FHA and non-FHA borrowers who want to refinance with an FHA mortgage have the option to choose a fixed-rate FHA loan or an adjustable rate mortgage.
The right choice for you depends on whether you plan to sell the home in the near to mid-term, or if you plan to stay in the home for the duration of the refinance loan. Ask your loan officer what’s best for you according to your financial plans.
Be sure to have your current mortgage information including interest rates, the amount of time remaining on the mortgage, and your current monthly mortgage payment handy when discussing your options.
FHA Refinance Loan Options
FHA home loan refinancing options include cash-out refinancing (FHA and non-FHA loans alike), Streamline Refinancing (for existing FHA mortgages only), no cash-out refinancing (FHA and non-FHA), and FHA 203 Rehab Loans (FHA and non-FHA).
For all FHA refinance loans there is also the option to add extra funds to the loan for approved energy-efficient upgrades to the home. Ask your loan officer about the FHA Energy Efficient Mortgage option if you want to pursue these upgrades and improvements.