FHA Refinance – What You Need to Know

In this article

1. FHA Refinance Rates
2. Closing Costs
3. Upfront Mortgage Insurance Premium
4. Streamline Refinance

Getting an FHA Refinance can be a good way to reduce your monthly mortgage payment, and save you money over the long term. However, there are certain things to keep in mind before you apply for a loan.

FHA Refinance Rates

Using FHA refinance can help you save money on your mortgage, but you’ll need to compare rates to find the best deal. There are some key factors that can affect your cost, including your loan’s term, the type of product you choose, and your credit score. You should also consider your closing costs, which can vary widely from lender to lender.

The lender will base the rate on your home’s value and your down payment, as well as your credit history. You will also need to pay for property taxes and insurance. Having a good credit score can lower your rate, but you’ll need to keep up with the payments.

You’ll have to pay a premium for mortgage insurance, but you may be able to get the cost reimbursed if you’ve already had a loan with the lender. Some lenders will also give you a free rate lock, which prevents you from changing your rate during the lock period.

Closing Costs

Buying a home with a mortgage can be an exciting experience, but it can also be costly. Luckily, many lenders offer assistance with closing costs. You can get the best deal by shopping around.

There are three main types of closing costs. First is the “usual” or mandatory costs. These include the cost of the appraisal, credit report and title examination. Other costs may include notary fees, deed recording fees, title insurance premiums and courier fees.

Aside from the usual fees, a few other closing costs are unique to FHA loans. These include the mortgage insurance premium, which is 1.75% of the loan amount. You must also pay prepaid property taxes, which can be a large portion of your total closing cost.

Lastly, you may want to check out your local property tax. If you live in a high tax state, you could be spending a lot of money on closing costs. Depending on your location, you could be spending between 3% and 5% of the purchase price on closing expenses.

Upfront Mortgage Insurance Premium

Whether you are purchasing a new home or refinancing your existing one, you will need to pay an Upfront Mortgage Insurance Premium. This fee is one of the largest closing costs, outside of tax escrows.

The Upfront Mortgage Insurance Premium is a one time fee charged by the Federal Housing Administration. It is a percentage of the total amount of the loan. This fee is generally 1.75% of the loan.

This fee is required for all FHA loans, including the popular cash-out refinance. It is also charged for rate-term refinances. When the fee is paid up front, it is refundable in the future. This means that you will get part of the fee refunded if you refinance to a FHA loan within three years.

This fee is an effective tool for lenders to offer competitive loans to borrowers with poor credit. It allows borrowers to obtain a home with a smaller down payment. It also means that you will have a lower interest rate over the life of the loan.

Streamline Refinance

Streamline FHA refinance is an option available to current FHA homeowners who wish to lower their interest rate. The process is simple, requiring only a few basic documents and less verification. However, the program has several limitations.

You must qualify for the FHA loan, which means that you must have a minimum credit score of 620. If your credit score is too low, you may be unable to get the best rates available. The lender will check your credit report and assess your ability to make mortgage payments.

You should avoid late payments. A late payment can be one of the reasons for an increased interest rate, so you should avoid paying them. You can correct any errors on your report and put yourself in a better position than you are in today.

You should also compare quotes from at least three to four lenders. This will save you hundreds of dollars over the life of the loan. A loan officer can help you determine which plan is the best for you. You can also ask them for personalized quotes, which are tailored to your home and financial situation.

Here at Moreira Team we can help you out and locate the best deal for you right now. Why not give us a call on 404-238-7888 for a quick confidential chat?