January 25, 2019
With recent interest rate headlines, some may be interested in refinancing their first home loan in 2019, especially those in adjustable rate mortgages who want to lock in an interest rate to avoid future mortgage loan rate fluctuations.
Some will ask how much of the credit-check process is needed for an FHA refinance loan compared to when the original mortgage was applied for, and much depends on the type of refinance loan being applied for.
Some refinance loans, such as FHA Streamline Refinancing, also known as an FHA Interest Rate Reduction Refinance Loans (VA IRRRL) do not feature a government-mandated credit check.
Qualified borrowers will use the original credit check and other information used on the first mortgage as a guide. Your participating FHA lender is, however, free to require a credit check and there may be some extenuating circumstances where one is a requirement.
For any first-time home buyer mortgage loan refinance with a credit check required, the process can be a lot like the original application.
Your loan officer needs your current employment data, pay amounts and current financial obligations for the purpose of calculating your debt-to-income ratio.
That ratio is very important-when answering important lender questions. Is your refinance loan going to raise or lower monthly payments? If the payments are going down, the entire issue may be a moot point if your ratio is more or less the same as it was when you applied for the loan.
Are you a first time home buyer interested in refinancing but afraid you may have too much debt? Consider giving yourself time to pay down some of your obligations prior to applying for the refinance loan or home equity conversion mortgage.
The stronger your financial position is coming into the loan application process, the better off you’ll be
Talk to a participating FHA loan officer about your options for refinancing out of an adjustable rate mortgage, getting a cash-out refi or home equity conversion loan. You’ll learn exactly what you need to do to get started, and never make the mistake of assuming you aren’t qualified to apply for a refinance loan-you may find them more flexible than you realize.
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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