Why an FHA Mortgage Might Be Right for You 

The FHA loan program has been more popular than ever the last few years as credit has become harder to get. FHA loans are one of the best options available for borrowers that would like to refinance their mortgage to get a better deal or to pay off debt. FHA loans are known as an easy loan to qualify for due to the flexible credit guidelines and the low equity requirements. Getting an FHA loan is popular for home buyers who have been through a financial credit event like a short sale, foreclosure or other financial hardship in the past and are looking to get their finances back on track.

Types of FHA Refinance Loans

FHA Streamline Refinance  

The FHA Streamline is a special program specifically designed for borrowers who currently have an FHA mortgage to be able to refinance with reduced documentation. It’s the easiest way to lower your monthly mortgage payment without having to verify a lot of information. That why it’s the most popular FHA refinance available today.

Why Are Streamlines So Great? 

FHA Streamline loans are by far the easiest refinance loans to qualify for due to the flexible credit guidelines offered and overall streamlined process. One of the best features of the streamline program is that it allows for an unlimited loan-to-value ratio. Or in other words no equity is needed to qualify for the program.

What are the Advantages of a Streamline? 

  • Fast turnaround time
  • No appraisal required 
  • No income verification  
  • No debt to income calculation   
  • Streamlined paperwork process 
  • Primary, investment or second home OK 

What are the Requirements? 

  • Minimum credit score 620 
  • Must be able to lower you payment 
  • No late payments over 30 days in last 12 months 

What About Mortgage Insurance? 

When you received your original FHA loan you agreed to pay an upfront mortgage insurance premium that is a lump-sum payment which was financed into your loan. In addition to this you agreed to pay monthly mortgage insurance that is part of your total monthly mortgage payment.

  • If you current FHA loan was endorsed before May 31st 2009 you will be able to keep your current monthly mortgage insurance of .55% and it will be .01% for the upfront. 
  • If you current FHA loan was endorsed after May 31st 2009 you will be required to get new monthly mortgage insurance of 1.30 and it will be 1.75% for the upfront.

FHA Cashout Refinance  

The FHA Cashout is an excellent option that lets you leverage the equity you have in your home to be able to payoff debt, consolidate a mortgage or simply pullout cash. It’s one of the most effective ways to consolidate high interest debt, including credit cards under one low fixed payment per month which may be tax deductible.

What are the Advantages of a Cashout? 

  • Cashout up to 85% LTV 
  • Payoff high interest debt
  • Can roll in all closing costs
  • Debt to income ratio up to 50% 

What are the Requirements? 

  • Primary residence only 
  • Minimum credit score 620
  • No late payments over 30 days in last 12 months 

What About Mortgage Insurance? 

When you a cashout your FHA mortgage monthly mortgage insurance and upfront mortgage insurance will be required just like on your original FHA mortgage.  

  • Your monthly mortgage insurance will be 1.30% and 1.75% for the upfront mortgage insurance. 

Frequently Asked FHA Refinance Questions:

What documents I will need for a refinance? 

  1. Copy of driver’s license 
  2. Copy of social security card
  3. Copy of your mortgage statement 
  4. Copy of your FHA mortgage note 
  5. Contact information for insurance agent 

Can I keep my same mortgage insurance?
Yes you can, as long as your FHA mortgage was endorsed before May 31st 2009.

Is it possible to skip two mortgage payments?
In some cases it may be possible to skip two mortgage payments as part of your refinance. It will depend on when in the month you close your loan.

There is little to no equity in my home, can I still refinance?
Yes you can. An FHA streamline will allow you to refinance without an appraisal.

Can I get help with my closing costs?
Yes. Many times you can get help with your closing costs by getting a slightly higher rate this allows your lender to offer you a  lender credit to offset your closing costs.

Will my loan amount increase?
Typically on a streamline your loan amount will only increase by the amount of the upfront mortgage insurance required based on the date when your FHA mortgage was endorsed.