August 10, 2023
In an age of high mortgage loan interest rates, some borrowers don’t have a choice. They have to buy soon and can’t afford to wait out the housing market. Some of these borrowers purchase a home with the goal of refinancing as soon as the rates fall to a better place.
At press time in 2023, those rates have NOT fallen to a better place, buying now and refinancing later is an option getting more popular by the day, or so it seems.
Planning Ahead Is Key
Borrowers approved for FHA mortgages at the higher interest rates available at press time are wise to consider a refinance loan once home loan interest rates have fallen again but they aren’t always sure what the best options are.
And more importantly to some, there’s a question of how long it will take to get out of the higher rate once a refinance loan makes sense.
Refinancing A Home Loan
Refinancing a home loan takes time. There’s the need to shop around for a lender, for a start. Some don’t realize at first that you do not have to use the same lender you used to get your mortgage.
Then there’s the decision of which FHA refinance loan option is right for you.
Those options include a simple refinance with no cash back to the borrower, which makes sense to those who don’t need a large lump of cash at closing time.
There’s also the option of an FHA cash out refinance, which requires a new appraisal and credit check, and even an FHA streamline refinance option with no FHA-required credit check or appraisal.
Will you pay closing costs out of pocket? Will you choose to finance any allowed closing costs into the new loan? These are all important considerations to make.
Applying To Refinance Your FHA Home Loan
Some want to know when the clock starts ticking for refinance loan approval. These borrowers may be anxious about paying higher interest rates for one more day than absolutely necessary. What do these applicants need to know about the process and how long it takes to get approved for a refi loan?
First, the timeline from start to finish may be as short as 30-45 days.
Second, some factors may complicate this timeline.
Third, some transactions may not take as long as others when essential services like an appraisal are not required.
The appraisal is one. How long does it take to get an appraiser to do the work in your housing market? If there is high demand, your timeline may be extended.
A refinance loan with no cash out may go faster depending on the type of loan. As mentioned above, the FHA streamline refinance option has no FHA-required appraisal.
If the lender chooses to skip the appraisal on a streamline refinance, your loan processing time may be faster than a loan that does require an appraisal.
Other Factors
There are issues that may require a participating FHA lender to re-consider loan approval, such as changes in the nature of your primary income in the middle of the loan approval process, seeking other credit before your loan has closed, or having a negative change in your FICO scores.
Don’t give the lender cause to reconsider your loan on the way to closing day.
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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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