FHA Refinance Loan Options: Lower Rates and Fixed Rate Loans
The answer you seek is informed by the transaction you need. Are you a current FHA borrower interested in a lower mortgage payment? In such cases refinancing may be simpler than you expect. You search for a lender, or use your existing participating lender, then apply for a new mortgage loan that pays off the old mortgage and gets the borrower into more favorable terms that result in a lower payment or interest rate.
For FHA-to-FHA transactions you will want to apply for an FHA streamline refinancing loan, which has no FHA required credit check or appraisal, though depending on lender standards, one or both may be required anyway.FHA streamline refinance loans are for existing FHA mortgages only and according to HUD 4000.1 (the FHA loan rule book) the new loan must result in either a lower interest rate or monthly payment, with some exceptions made depending on specifics of your refinance transaction.
What kind of exceptions might be possible? Borrowers who are refinancing out of an adjustable rate mortgage into a fixed rate loan may not get a lower monthly payment or interest rate as required (see above) but getting into the fixed rate mortgage is considered a tangible benefit and therefore makes the loan possible with an exception to the “lower payments/interest rates rule”.
For non-FHA mortgages, borrowers should know it is possible to refinance into an FHA loan and take advantage of potentially lower FHA loan rates, especially if the borrower is currently paying on a conventional loan or an adjustable rate mortgage.
FHA cash-out refinancing and non-cash-out FHA refinance loans are both possible for qualified borrowers. In these transactions the borrower should expect both a new check and appraisal. Cash-out and non-cash out FHA refinance loans can happen with the existing lender, for those who have conventional loans through a lender that also participates in the FHA loan program. As with most FHA loans, there are closing costs and associated fees that will apply for the new loan.
Some closing costs may be permitted to be financed into the loan, and there are also funds available for energy efficient improvements to the home as part of the FHA refinance loan package.
Speak to a loan officer to learn what your closing cost and energy efficient mortgage options are before you apply.
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