- Featured Columnists
- My Business
- My Cash
- Women In Business
- Industry Solutions
- Social Media
- Calculators and Tools
- My Employee
|Share / Print / Sitemap|
Refinancing With an FHA Loan
Many home buyers consider an FHA loan (Federal Housing Administration, a government agency that provides mortgage insurance on qualifying loans) when they purchase a home. But did you know you can also refinance an existing loan into an FHA loan? FHA loans offer several advantages:
FHA financing is only available for homeowners living in their home; you cannot qualify for an FHA loan for rental or investment properties.
Want to know more? Here are a few options and programs that make FHA loans even more attractive.
Streamlined FHA Loans
FHA guidelines now make it easier for loans to be processed and approved. Keep in mind "streamlined" doesn't mean "cheaper." Streamlined simply refers to the amount of paperwork and processing required.
To qualify for a streamlined FHA refinance:
If you qualify for a streamlined refinance, you may not be required to perform an appraisal, verify income, undergo credit checks − you may even be able to handle the entire application process online.
Energy Efficient FHA Loans
FHA energy efficient mortgages are loans made to encourage using less energy. Under this type of refinance, you will use the loan to make energy efficient improvements to the home.
An energy-efficient refinance could result in a higher monthly mortgage payment; the FHA assumes some or all that increased cost will be offset by energy savings you will enjoy. In other words, your mortgage payment may be slightly higher, but your electric bill should also be lower.
Cash-Out FHA Refinancing
Cash-Out refinancing allows you to refinance your mortgage and tap some of the equity in your home. For example, if your home is worth $150,000 and you only owe $80,000, you could refinance into a $100,000 mortgage and receive $20,000 as "cash-out."
The key, of course, is that you must have sufficient equity in your home or the value of your home must have increased dramatically. In general terms, you must have owned your home for more than one year before you refinance, and you can refinance for up to 85% of the appraised value.
But, keep in mind whenever you take a cash-out mortgage, whether through an FHA loan or a conventional loan − the mortgage is secured by your home. Any loan using your home as security puts you at risk of losing the home if you fall behind or default on your mortgage obligations.