Why Refinance With FHA Instead of a Conventional Loan?
In cases like these, a borrower may be tempted to look into a conventional refinance loan instead of an FHA refi, but there are advantages to staying with an FHA mortgage you should know before making a decision.
FHA Refinance Loans for Existing FHA Mortgages Include a Streamline Option
If you have an FHA mortgage loan that is current and not delinquent, and you have made at least six mortgage payments in a row on time, you may be eligible to apply for the FHA Streamline Refinance loan option which carries no FHA-required credit check or appraisal.
FHA Streamline refi loans are designed to get you a lower rate, monthly payment, or some other defined and tangible benefit. A lower mortgage rate is definitely possible with these streamline refinance mortgages.
A Streamline Refinance loan will have closing costs, and you cannot get cash back on the transaction with a streamline loan; but for the borrower who needs to pay less each month on the home loan, this is an excellent alternative to a conventional refinance which will make you submit all the credit and employment data all over again.
FHA Refinance Loans for Homes That Need Repairs
An FHA refinance loan option you should explore if your first home is in need of repairs or upgrades? The FHA 203(k) Rehabilitation loan can be used to refinance and repair the home with approved projects and using FHA-approved contractors.
Best of all, there is a Limited 203(k) Rehabilitation loan that doesn’t require you to refinance for a large sum of money if you only have a modest amount of work to do. Ask your lender about this refinance loan option and be sure to explain the kind of work you need to do so you can make the best choice between the limited or standard FHA rehab refinance loan.
Don’t Have an Existing FHA Mortgage? Do You Need to Refinance Into an FHA Mortgage?
FHA refinance loan options for non-FHA mortgages include simple refinancing where the goal is simply to refinance into an FHA mortgage and the interest rates that would apply for an FHA mortgage.
Another choice would be to refinance a non-FHA mortgage using an FHA cash-out loan but you do not have to use cash-out refinancing to refinance out of a conventional mortgage and into an FHA loan.
Remember, you are not required to use the same lender you applied for the original mortgage with; you are free to shop around and find a new participating FHA lender.
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