Need to know your FHA refinance loan options? There are many good uses for an FHA refi loan including using cash-out refinance options to reduce existing debt or make a large future purchase to help with school, a job, etc.
#5: FHA Refinance Loans Can Be Used To Get A Lower Interest Rate
FHA interest rates are negotiated between borrower and lender. The rate you are offered with an FHA mortgage may be lower than conventional rates, so if you currently pay on a conventional mortgage it is a very good idea to ask a participating FHA lender how you may be able to get a better rate.
Home loan interest rates offered to you are dependent in part on your credit, but don’t assume just because you have had credit issues in the past that you won’t be eligible for a rate lower than the loan you are paying on now. Ask a lender to be sure.
#4: FHA Refinance Loans Can Be Used To Get Into A Fixed Rate Mortgage
Do you have an adjustable rate mortgage (ARM) that is due soon for an interest rate adjustment? Refinancing out of an FHA or non-FHA ARM loan is possible with an FHA loan.
If you have an existing FHA mortgage, you can use FHA Streamline Refinancing to get into a fixed rate loan with no FHA-required credit check in most cases.
Your loan officer may still require a credit check depending on that financial institutions rules or other factors, but the FHA Streamline refi could get you on the road to a more affordable mortgage.
#3: FHA Refinance Loans Can Be Used To Remove Another Borrower From The Loan
You can use FHA refinancing to take another borrower off your loan, which is helpful in cases where a co-borrower wants to purchase a home of their own or when a divorce proceeding requires one borrower or the other to give up claim to the property.
In general at least one borrower originally obligated on the mortgage must be on the new loan.
#2: FHA Refinance Loans Can Be Used To Get Cash Back
FHA Cash-Out refinance loans allow cash back to the borrower for any purpose. There are other non-cash out refinance loans but this is the only non-reverse mortgage loan option where cash is permitted to go to the applicant.
FHA Rehab loans and other mortgages that allow funds for the repair or upgrade of a home do not permit the cash directly to the borrower without an approved, specified purpose which must be documented.
#1: FHA Refinance Loans Include Reverse Mortgages
Borrowers aged 62 or older may qualify for an FHA reverse mortgage, also known as a Home Equity Conversion Mortgage or HECM. These loans have cash back amounts that may vary depending on the nature of the HECM loan.
Borrowers will need to choose between a fixed rate and adjustable rate HECM, use the home as their primary residence, and stay current on all property taxes and upkeep of the property.