January 5, 2018
Why should I refinance with an FHA loan? There are many reasons why you might need or want to refinance into an FHA mortgage. Much depends on your financial needs and goals, and it’s good to know your options for FHA refinancing as you explore the finer points of refinance loans.
FHA Refinancing For FHA and Non-FHA Mortgages
The FHA refinance loan program has options for both existing FHA and non-FHA mortgages alike. You may also be able to get FHA financing on a property that has no existing mortgage. Talk to a participating FHA loan officer about this option.
FHA refinance loan options include cash-out, no cash-out, and more. You don’t have to take cash back on an FHA refinance loan, but if you want a cash-out refinance loan you’ll need to be prepared for a new appraisal and credit check.
All FHA refinance loans have an occupancy requirement-what you read here applies only to properties the borrower will use as their primary residence/home address. FHA single-family refinance loans described here cannot be used for investment properties, vacation homes, time shares, etc.
FHA Refinancing Loans For Non-FHA Mortgages
You can apply for cash out or no cash out refinance loans regardless of whether the current mortgage is an FHA loan or not. Some FHA refinance options (see below) are for existing FHA mortgages only, but if you seek a typical refinance loan, FHA mortgage options are definitely available.
All non-FHA refinance loans will require a new appraisal and credit check, it’s best to anticipate the expense for these in advance as part of your loan budgeting and planning.
FHA Refinancing Loans For Existing FHA Mortgages
FHA refinancing options for existing FHA loans includes a Streamline Refinance Loan that has no FHA-required credit check or appraisal; your original application data may be sufficient for this type of loan (though you will have to fill out some paperwork regardless). Lender standards will apply in addition to FHA requirements; be sure to ask your loan officer what is required with an FHA Streamline Refinance loan.
FHA Energy Efficient Mortgage (EEM) Options For FHA and Non-FHA Loans
When you refinance with an FHA mortgage, regardless of whether the original loan is FHA or not, you have the option to apply for additional money to be added into your loan to pay for approved energy efficient upgrades and improvements to the home. You will have to work closely with the lender for this option since the upgrades must be approved and paid for according to specific FHA and lender guidelines.
Proof of installation and other steps may be required; the FHA EEM funds are not simply dispersed to the borrower to use as he or she sees fit. The use of these funds will be regulated.
FHA Reverse Mortgage Options
The FHA has a reverse mortgage option known as the Home Equity Conversion Mortgage. This is for qualified borrowers aged 62 or older, and requires mandatory Reverse Mortgage counseling as a condition of loan approval. There are no monthly payments, and the loan comes due when the borrower stops using the home as the primary residence, dies, or when other circumstances (as determined in the loan agreement) occur.
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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