Why does refinancing makes sense right now? Because it could save you a lot of money! For example, if you’re in a 30 year mortgage, and your current interest rate is higher than 4%, you’re probably paying too much. Looking into refinancing may be a huge money saver. It never hurts to look into refinancing programs like an FHA Cashout or even a shorter term mortgage program like a 15-year FHA loan.
What is an FHA Loan?
The FHA Cash-Out Loan
An FHA Cashout Refinance is perfect if your property has some built up equity. A cashout loan can be used to pay for home improvements or updates, pay for college fees or even debt consolidation. It involves replacing your current mortgage with a new one, and leveraging your equity to get the cash you need.
As with any mortgage, there are certain requirements you must meet to be eligible for an FHA refinance. Here are some of the main ones:
- The refinanced property must be your primary residence.
- You must have at least 20% equity in your home when it is appraised.
- A credit score minimum of 580 is required.
- There are certain debt-to-income guidelines laid down by the FHA to prevent people
taking on more debt than they can handle.
- The maximum, available loan amount is up to 80% of the appraised value of the property.
- You must be able to provide mortgage payment documents for the previous 12 months.
If you need some more information, or just want to have some questions answered to see if a cashout refinance is right for you and your situation, get in touch with us. And see if an FHA refinance loan can help you.
The FHA Streamline Refinance
The FHA Streamline Refinance was designed to be quick. The goal is to reduce the interest on your mortgage and it can be done quicker than most other loan programs, sometimes with no appraisal. Here are a few requirements needed to qualify for an FHA Streamline Refinance::
- Available only to persons who already have an FHA loan.
- Current mortgage must be at least 210 days old with up-to-date payments for the past 6 months.
- Your property must be valued at a net benefit to you for eligibility.
- Must have good credit.
More Refinance Options
The above are two of the most popular FHA mortgage options and should give you an idea of what to expect. There is also a Simple Refinance option which allows you to switch between FHA loans for a better deal, plus the Rehab option for when you need to renovate an older property, and the Reverse deal which is for older people who want to convert their equity into a line of credit.
If you have any questions or want to know more about a refinance program, please reach out to us. There is always a licensed mortgage advisor here to help. Think a refinance might be a beneficial option for you, give us a call or fill out a quick quote below to see how much you can save.