FHA Refinance Review – What Is FHA Mortgage Refinance?

Who cannot deny that borrowers trust FHA Refinance because an FHA Refinance Mortgage is insured by the Federal Housing Administration? By the way if you are not yet familiar with the Federal Housing Administration it is a government agency within the U.S. Department of Housing and Urban Development. Because of this assurance and FHA Refinance programs, lenders can and will offer FHA Refinance loan. These comes with less strict and better flexible qualification requirements when you file for FHA Refinance Mortgage. Nothing can beat this powerful qualities.

FHA Refinance reviews shares that this is your best choice if you do not have equity to qualify you for a conventional loan refinance. FHA Refinance reviews add further that if you have less than perfect credit you do not have to worry over qualifying for a loan because FHA Refinance programs will accommodate you. If you value taking home a stable monthly payment that offers you lower Annual Percentage Rate because of its Adjustable FHA Refinance rates mortgage. If you are looking for a loan where the closing cost can be finance, you found the perfect match in FHA Refinance.

 

What is FHA Refinance? 

FHA Refinance is not a lender, it is simply an insurance fund. This means as a borrower, you need to get your loan approved by an FHA lender. However, you are constantly reminded that these lenders do not offer the same rates and cost. This is why as a borrower you are encourage to shop around. You cannot blame this organization that handles your insurance fund if you fail to get the best deals because from the get go you are reminded to shop around first before making the final decision to go with a certain lender. You are given several options to file for refinance loans. For instance, Streamline refinance as the name implies is the easiest way for you to qualify for a refinance loan.

This will require less paperwork because this is based on your previous existing loan filed with this insurance fund. In other words, your previous loan will be the pattern that the lender will use to approve your Streamline refinance. This is based on your previous credit reports, income statements, appraisal and inspection as well as bank statements. The requirement is really simple: that you have a job and that your new refinancing loan must result to lower monthly payments as compared to your existing loan. Credit issues does not matter for Streamline refinance because you took out your existing mortgage since your new lender will not even pull our current credit report. 

How Does FHA Refinance Work? 

The Federal Housing Administration provides mortgage insurance on loans made by the approved lenders working with them. FHA Refinance insures these loans for you whether you belong to a single family or even a multi-family home and a US resident or its territories. This insurer has been insuring tens of millions of properties since 1934. Just how much you need to pay for your mortgage insurance will depend on your closed current mortgage. Information shows that as of June 2012 the FHA offers reduced upfront insurance premiums if you have filed your current mortgage prior to June 2009. As a borrower, you are required to pay 0.01 percent of the loan amount. However, if in case you took your current loan after June 2009 expect a higher upfront mortgage insurance premium of 1.75 percent. This is actually a great deal because it minimizes your loan from 10 percent down to more than 3 percent.

There are actually three different kind of Federal Housing Administration refinancing loans. The requirements for each of these loans might be different depending on the option that you choose. The three kinds of refinancing loans are as follows: Streamline Refinance, Cash Out or Replacement loans. The first two options requires you to have an existing FHA loan while the third kind requires an existing conventional loan not made under FHA Refinance.

Some of the requirements are much the same regardless of the type of refinance you filed for. However, you cannot file for a refinance loan if you are late with your payments or behind payments even for a week or two. Your application will only be accepted as soon as you submit the current loan payment. If you are very late with this payment, you will be required to pay for late fees and default interest. 

FHA Refinance Rules 

Here are some of the current FHA Refinance rules, your current mortgage must be insured with them. You must have a record of paying on time full payment for the past 12 months. This clearly shows that you must have a good record of being a responsible borrower. You are required to have at least 620 credit score as oppose to the 500 credit score for an average refinance loan. You are warned that some lenders may require higher credit scores of 640 or 680 on your loan. You must not have any refinanced within the previous 210 days. These are the guidelines that you must comply with if you are after streamlined refinance.

Don’t worry if a mortgage lender turns you down since each lender have their different set of loan requirements. If in case one lender turns you down there is still somebody out there who is willing to work with you. It is not just these individual mortgage lenders requirements that you need to comply with. FHA Refinance review reveals that you have to comply with the net tangible benefit requirement. It works this way, refinancing will either help you avoid future increases in mortgage rate. Net tangible benefit will reduce your total monthly payment which includes principal, interest and mortgage insurance by at least 5 percent. However, the interest rate does not have to drop by 5 percent in this case it is just your payment.

FHA Refinance review says that some homeowners feel that there is a catch somewhere in this rules. This is because even though you have been paying mortgage insurance premiums with this loan you need to continue paying them with a refinance. These mortgage insurance premiums could be higher on your new loan and erase any payment reduction achieved with a lower interest rate. In case that you have credit issues like filing for bankruptcy within the past two years sadly, you do not qualify for refinance. The same principle applies if you have an existing tax lien that you did not pay off.

It is clear that refinance might not be for you if you are not a responsible borrower. The same thing can be said if you like to skip some of your payments or always pay at a later date. To be fair, what lender would approve your loan if you don’t know how to pay for it? This will give them an idea whether you will likely pay for the amount that you owe from them or repeat the same trend as you did before. Anyways, these will be reflected in your credit scores that lenders will likely get a clearer picture when they look into it. In fact they have what they call FHA Connection Neighborhood Watch that allows authorized users to monitor mortgage delinquency pattern in a given geographical location, by lender or by loan details. Some recent updates on these guidelines reveal that you are not required to have an existing mortgage to qualify for the reverse mortgage. Your new mortgage will be an insured loan regardless of the status of the previous loan.

You are encourage to check on recent developments that occurred since the last time that you filed for a loan. Research shows that this insurer constantly evolves into something better so that it can serve you better. After all, these were made in order to provide decent homes for U.S. citizens. The Fair Housing Act regulation forbid discrimination of any kind when lending. They cannot turn your loan down based on racial criteria.

FHA Refinance Rates 

FHA Refinance rates mortgage are insured with the Federal Housing Administration. These Fixed FHA Refinance rates are to use to refinance your home. Does FHA Refinance Work? With no less than the government as your back up, you are better off than just any company or organization that offers the same service. These FHA Refinance rates is actually advantageous offer especially if you do not have a lot of equity in your home. FHA Refinance rates will work better for you if you are prohibited to apply for traditional loans. FHA Refinance review reveals that you will be required to have two insurance premiums. The upfront premium is 1.75 percent of the amount that you have loan. This means if you have a $100,000 loan, your upfront premium is $1750.

This upfront premium is paid when you get the loan. Another alternative is to finance this as part of the loan amount. The second one is what is known as annual premium even if it is paid on a monthly basis. The rate for your annual premium will vary and will depend on the amount that you borrow and initial loan to value ratio or LTV. FHA Refinance shows these samples of annual premiums for loans. For a 15 year loan, with an equity of less than 10 percent this means you will be charge with 0.7 percent. If you have applied for a 15 year loan but has equity of 10 percent or more you will be required to pay 0.45 percent. FHA Refinance review reveals that for a 30 year loan with less than 5 percent equity or down payment you will be required to pay 0.85 percent. However, the rate is lower if you have a 30 year loan with 5 percent or more down payment. You will only be required to pay 0.8 percent.  

FHA Refinance Cash Out 

Since FHA Refinance rates are borrower friendly, FHA Refinance cash out is definitely the perfect choice. Are you worried about qualifying for a loan because you simply do not have a perfect credit? Are you looking to get cash out with your refinance? Do you give importance to a stable monthly payment, lower Annual Percentage FHA Refinance rates with adjustable rate mortgage? Are you looking for a loan where closing costs can be financed? If you say yes to all of this, FHA Refinance cash out is what you are searching for and the search is over.  You can expect a maximum loan to value ratio or LTV of 85 percent. This LTV is determined by your credit score. Does FHA Refinance work?

Loans offered under FHA Refinance are created to make it easier for you to attain your loans rather than go with conventional lending institutions whose qualifications you might not qualify for. In some cases according to FHA Refinance review the requirements are too demanding and quite exhaustive. No wonder why some people would rather look for fresh new alternatives. The problem is that if you have poor credit you are left with fewer choices. Thanks to this organization because you are given a better choice. An easier way to achieve your dreams to own your home even if your present situation is not as positive as you would like for it to be. 

FHA Refinance Mortgage 

FHA Refinance Insurance is never intended to be an easy way out for borrowers who may not be as happy as their current mortgage payments. Loan providers can offer some relief to borrowers who have FHA insured loans. If you are somebody who suffers from a serious financial hardship and are struggling to make ends meet to come up with payment these loans will serve as relief. The relief offered by this insurance is a temporary relief for this period of personal financial crisis that will help to modify your loan. As a result, you will get lower interest rates or you are given an extended payback period. In some cases, this is a deferral of a part of the loan balance that will not come with interest.

The loans will not come directly from this insurer. FHA only guarantees home loans to reduce the risk for lenders and offers an increase borrowing power to qualified applicants. To pre-qualify for this mortgage, you must be ready to show that your job is stable. You must also show proof that you are reliable as a borrower, this means you always make payments on time. You also have to show the insurer that just in case you lose this job that you are highly employable and it will not be hard for you to look for another job. Single family home mortgages are given an increase of nearly thirty thousand dollars in insured home loan money as of 2006.

Unlike other mortgage refinance options the streamline refinance program allows you as a borrower to file for a loan even if you have an existing mortgage. Yes, you can have a new insured home loan that will not require your home to be appraised. You will not be required to submit documentation of income or assets. Depending on your current loan, you might qualify to avail of lower mortgage insurance fees that are available to the borrower.

If you submit your paperwork electronically the Total Scorecard is used to measure your credit risk through this insurer’s automatic writing system. However, you need to give this insurer as detailed information as you can. If you are a veteran, you are required to submit DD Form 214 along with the loan application documents. For those who may not be familiar with DD Form 214 this is the official record of discharge from the Armed Forces. If you are a first time home buyer the 203 (b) Fixed Mortgage Loan program is the most highly favored home loan.

Expect to be charge with reasonable mortgage loan fees which includes appraisals, inspections, credit reports, documentation preparation fees and other similar expenses. You must be inform that there are fees that you will be charge with like courier fees, wire fees, recording fees and taxes as well as real estate broker fees. This mortgage is design in such a way that you can have a home for a fair price. It is the hope of this insurer that you will not need to pay more or beyond the normal fees associated with buying a home.

 

Conclusion 

The FHA has the mission of helping borrowers like you to get the exact amount thay you qualify for in terms of loan. They do assist lenders by reducing the risks in issuing loans. In other words, FHA acts on behalf of both parties involve. It makes effort to make these loans available if you qualify. By the way, before you start the loan process, come prepared with the loan application. Have your information organized and ready for your loan officer to review. Expect that you will pay for property appraisal and credit report. Bring extra money for this and other eventualities. Only the loan office can determine the specific closing cost and the specific amount involve. This insurer determines which of these closing cost are allowed to be charge to you as borrower. They will determine which charge are reasonable enough.

The best thing to do if you want to know the exact FHA Refinance rates for a specific lender is to check out each of their rates. Be reminded that each lender and its location will determine these rates. Knowing beforehand how much you are obliged to pay each month will help you create a budget that will not affect your day to day expenses. After you fill up the application matched lenders will contact you to give you exact figures for your new monthly payments. Who says that all is lost? The US government has find a way to help you stand up after the setbacks that you have suffered from.

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