April 20, 2018
Do you know what you need to get ready for an FHA refinance home loan application? There are several areas you can prepare in before it’s time to sign the loan application paperwork.
Check Your Credit Reports-EARLY
FHA refinance loans should be treated in the same way your original home loan application was handled in terms of checking credit, avoiding new lines of credit before and during the refinance loan process, and trying to lower your debt ratio before the application.
Decide The Right Refi Loan For You
Your preparations for the new loan may depend greatly on the type of FHA refinance loan you are looking for; cash-out, no cash out, Streamline Refinancing, rehab refi loan, etc. How are these loans different? There are too many aspects to discuss exhaustively, but cash-out refinance loans require both a new appraisal and a credit check.
FHA Streamline Refinance loans for existing FHA mortgages have no FHA-required appraisal or credit check in most cases, but your lender may require them anyway depending on circumstances and lender standards.
Know Your Housing Market
Hand in hand with the idea of knowing the right loan for you? The notion of staying current on the trends in your housing market. Why does this matter? If property values are dropping at the time you get your new appraisal, you may get a smaller loan than you expect.
If property values are rising and your appraisal will show an increase in the overall value of the home (plus any equity you have built up over the lifetime of your original mortgage) you may get a better result than you expected.
Naturally this depends on the condition of the home being appraised, plus other factors that act as variables in any given appraisal situation. Your experience may vary.
Save Up Money For Closing Costs As Early As Possible
A variation on an old saying about business applies here; when buying or refinancing a home you have to spend money in order to get the transaction done. There are appraisal fees, lender fees, the option to add energy-efficient upgrades to the loan amount (which can require the hire of consultants or other experts), and more. You will want to anticipate the appraisal/inspection fees and closing costs as early as possible to give yourself the most flexibility when you apply for the loan.
Talk to a participating lender about your FHA refinance loan options today. You may be surprised at the range of choices available to you.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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