Refinancing With an FHA Loan in the New Year
FHA Refinance Loan Options
There are several options in the FHA single-family home loan program when it’s time to review your refi loan options.
They include FHA cash out refinancing, FHA streamline refinance loans (when rates are low enough to justify them), and FHA refi loans with no cash out options.
You can also choose to refinance an existing property with an FHA 203(k) rehab loan that lets you refinance and renovate simultaneously.
Least Likely Refinance Loan Option in Early 2024?
At the time of this writing, mortgage loan interest rates are far too high to consider using an FHA streamline refinance option. FHA streamline refi loans are for those who want to apply for a refinance with no cash back, no FHA-required credit check, and no FHA-required appraisal.
Streamline refinance loans must typically result in a benefit to the borrower and one of the most popular benefits is a lower mortgage rate.
At the time this article is being written, FHA loan rates were still too elevated for those who got their original FHA loan case numbers when loan rates were still low.
A Better Option? FHA Cash-Out
Cash-out refinancing is an option for those who have a primary goal of getting into a lower interest rate or a lower monthly payment. It may not be as idea as a streamline refi but when conditions require you to look for other options, cash-out becomes more viable by comparison.
The option may be best (compared to FHA streamline refi options in early 2024) for those with 20% equity in their property or greater.
FHA 203(k) Rehab Refinance Loans
If you have a renovation project you want to pay for, an FHA rehab loan (also known as an FHA 203(k) rehabilitation refinance loan) can be written as a refinance for your existing mortgage. You can rehab your house with this loan, but the project must have lender approval and meet FHA requirements regarding scope of work and scale.
Some find the 203(k) option a better one than using cash out funds to pay for the same project. Some choose cash out refinance loan options over rehab loans because the project they want to pay for may not be approved under the 203(k) program. It’s something to keep in mind when weighing your options.
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