FHA Refinance Loans You Should Know About
But these situations and the loans applicable to them aren’t the only options to refinance. You can refi an FHA or a non-FHA mortgage, there are options for a no-cash-out refinance to help you out of your current loan and into a new FHA mortgage.
What do you need to consider when you look at your FHA refi choices? It helps to think about your goals for the home and your plans for the future. Do you want to keep or sell the property? Are you thinking about an FHA refinance because you need extra money to repair or renovate your house?
If you plan to keep the home, your choices may be different than if you plan to sell. For example, if you took out a cash-out refinance loan to do some renovation work, the choices you make may be affected by a need to sell the home in the future if that’s what you plan to do.
Home renovations to customize your home are advised if you plan to keep it...if you plan to sell, it’s better not to customize but to add or improve things that make the home more competitive in the housing market. That may mean selecting more neutral styles for features like upgraded countertops, paint schemes, etc.
The FHA Cash-Out Refinance option is good if you want no restrictions whatsoever on how you use the money., But if you want to use the loan specifically for rehab or remodeling projects consider an FHA 203(k) Rehabilitation Refinance as an alternative to a cash out refi.
203(k) loans don’t allow unrestricted cash to the borrower--the funds must be used for specific purposes you and the lender agree on. You can apply for a Limited FHA 203(k) if you have only a small amount of work to do. This option has a lower loan amount and allows no alterations to load-bearing walls or other major structural work. There is also a “Standard” 203(k) if you need to get a bigger project done.
Do you have an existing FHA loan and don’t want cash back? Are you in search of a lower mortgage payment or interest rate? Perhaps you want to get out of an adjustable-rate mortgage, the FHA Streamline Refinance option may be the answer.
When refinancing your FHA loan or refinancing out of a non-FHA loan into an FHA mortgage; you will have to pay mortgage insurance. Those who start saving for this expense far in advance may be able to consider paying the Up Front Mortgage Insurance Premium in cash rather than financing it.
Remember that you can shop around for a refinance loan the same as you did for the original mortgage. You don’t have to stay with your current lender, but your lender may offer you some kind of incentive to keep the loan with them. It never hurts to ask.
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