Are you planning to buy your first home and wondering about your refinance loan options later down the line? Do you already own a home you need to refinance?
There is good news for you; refinancing with an FHA mortgage can help you get into a lower mortgage payment, get out of an adjustable rate mortgage, or even renovate your house.
What does it take to refinance a home loan with an FHA mortgage?
Choose The Refinance Loan You Need
There are several FHA refinance loan options. If you need to remodel or repair your home at the same time you refinance, you can apply for an FHA 203(k) rehab loan that provides funds for approved upgrades and improvements. But the FHA rehab refinance loan (which is also available as a forward mortgage to purchase a fixer-upper) is not the same as the FHA Cash-Out Refinance loan option, so you would definitely need to select the right mortgage product.
Why Some People Choose FHA Cash-Out Refinance Loans Over FHA Rehab Loans
FHA Rehab loans have certain restrictions; you can do approved improvements but those improvements can’t include adding luxury items such as a new pool or barbecue pit.
Cash-out refinance loans have no such restrictions and if you are interested in refinancing in order to add a pool, barbecue, hot tub, etc. the FHA cash-out refinance loan option is definitely the better choice provided you have enough equity in the property to take value out in cash.
FHA Refinance Loans For Existing FHA Mortgages
You are not required to have an existing FHA mortgage loan in order to refinance into an FHA mortgage, but if you do have an existing FHA mortgage you may be able to get into a lower mortgage loan monthly payment by taking advantage of the FHA Streamline Refinance Loan which does not provide cash back but does generally require a benefit to the borrower such as a lower payment or interest rate.
FHA Streamline Refinancing can also be used to refinance an existing FHA mortgage with an adjustable rate into either a new adjustable rate loan or a fixed-rate mortgage.
Ask your lender about your FHA refinance loan options and remember that you are not required to use the same lender to refinance your home loan-you are free to shop around for a new lender if needed.
How do you refinance a home loan? Choose the right refi loan for you, discuss your needs with a loan officer, and start preparing for your refinance application the same way you prepared for your original mortgage loan.