August 5, 2020

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Rising Equity And FHA Refinance Loans

Rising Equity And FHA Refinance Loans

With reports of rising equity in many housing markets over the last year, it makes sense for those with mortgages to consider an FHA refinance loan.

If your financial goals include being able to pull the value of your home out in cash with an FHA refi, there are options to consider alongside the cash out refi loan that could make the difference when deciding which refinance loan is right for your needs.

A CoreLogic Homeowner Equity Report reveals that in the last year, home equity in some markets went up nearly five percent since the second quarter of 2018. How much is that increase worth to the home owner? Nearly $5 thousand.

Overall, the amount of money homes are worth increased nationwide in the last 12 calendar months to the tune of $428 billion in equity, according to the CoreLogic report.

So why do you need to think twice when refinancing your home?

It is important to get the right kind of refinance loan for your financial goals. If you want to renovate your home, for example, an FHA rehab loan (the FHA 203(k) Rehabilitation Refinance Loan, specifically) might serve your needs much better if your refi money is going toward home improvements.

You can’t get cash back for any purpose with an FHA rehab loan, so if that is your goal, the FHA cash-out refinance loan is likely the better option.

And with an FHA Cash-Out refinance, you also have the option to add energy-saving upgrades to the loan. An approved set of energy-saving improvements to the home may be financed along with the cash-out loan or practically any other type of FHA mortgage or refinance.

There are some things to remember about FHA refinance loans. Occupancy is a requirement, so you cannot refinance an investment property or a time share. You also cannot refinance a vacation home or other part-time occupancy property.

But if you are an owner/occupier, the FHA refinance loan option is definitely one to look into.

Some borrowers read about the rising equity situation we’ve been discussing here, and combined with a lot of talk of lower interest rates in 2019, want to think about refinancing even though they are new in their original mortgage. It’s important to know that the longer you pay on your home loan, the better your borrowing power for a cash-out refinance loan can be.

And on top of that, FHA loans have rules about how old a mortgage can be before it becomes eligible for a refinance. You may have to make a minimum number of mortgage payments and wait 12 months or more; lender standards will definitely be a factor and NOT just FHA loan rules.

Why not make arrangements to talk to a participating loan officer to discuss your refinance loan needs and get some advice on the right refi for you?

You can fill out an online form (the website is a private company and is not affiliated with any government agency including the FHA) to be put in touch with a lender to talk about your refinance options.

Joe Wallace - Staff Writer

By Joe Wallace

September 26, 2019

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 for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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