FHA Refinance Loans for Homeowners

Learn About the FHA Cash-Out Refi and Other Programs

With home values continuing to rise, homeowners have gained more equity in recent years. This may allow you to refinance your home and eliminate existing monthly mortgage insurance premiums. You may also use that equity to pay off high interest credit debt or use the cash for home repairs.

Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence now.

This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash-Out Refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe. To be eligible for an FHA cash-out refinance, borrowers will need at least 20 percent equity in the property based on a new appraisal.

A Cash-Out Refinance can be a smart option for many homeowners. Whether it’s for home improvement, college tuition, debt consolidation (to pay off other high interest rate loans), student loan debt, or home remodeling, you can access money that you have in an illiquid asset.

• Credit Score Guidelines
  Applicants must have a minimum credit score of 580 to qualify for an FHA cash-out refinance.
• Debt-to-Income Ratio Guidelines
  The FHA has guidelines regarding an applicant's debt-to-income ratio in order to keep people from entering into mortgage agreements that they cannot afford.
• Maximum Loan-to-Value Guidelines
  FHA Cash-Out Refinance loans have a maximum loan-to-value of 80 percent of the home's current value.
• Payment History Requirements
  Documentation is required to prove that the borrower has made all the monthly payments for the previous 12 months.

• Ready to Apply for an FHA Cash-Out Refinance Loan?
• FHA Refinance Cash-Out vs. Interest Rate Reduction
• FHA Mortgage Relief: Do You Need Cash-Out Refinancing?

This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamline Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.

• Your Current Mortgage Must Already Be FHA-Insured
  While refinancing from a conventional loan to one backed by the FHA is possible, the Streamline option is only available to borrowers with an existing FHA loan.
• The Mortgage Must Be Current
  This means that you have not missed any payments. You must have made at least 6 monthly payments and have had your existing mortgage for a minimum of 210 days before you can apply for the Streamline Refinance option.
• There Must Be a Net Tangible Benefit
  The FHA actually requires that there be some advantage for the borrower if they go ahead with a Streamline Refinance.

SEE YOUR CREDIT SCORES  From All 3 Bureaus  

• Ready to Apply for an FHA Cash-Out Refinance Loan?
• FHA Refinance Cash-Out vs. Interest Rate Reduction
• FHA Mortgage Relief: Do You Need Cash-Out Refinancing?

The FHA Simple Refinance allows homeowners to go from their current FHA Loan into a new one, whether it's a fixed-rate loan or an ARM. This refinance is the most straightforward, and there is no option for cash-out. Lenders will require a credit qualification, income, and assets to ensure the borrower meets the loan requirements.

Homeowners should think about several factors while considering the benefits of refinancing their mortgages. Below are some of the most common goals borrowers have when moving forward with their refinance options.

• Lower Monthly Payments
  Refinancing your home gives you the opportunity to get a lower interest rate on your mortgage, which means smaller monthly payments.
• Switch to a Fixed Rate Loan
  Even by switching from an ARM to fixed rate mortgage, you could avoid higher monthly payments and will have a set amount to pay every month.
• Earn Cash on Your Home Equity
  It allows you to borrow cash against your home equity in the case of large upcoming expenses. By liquidating this equity you can get cash-in-hand.

• FHA Simple Refinance and the Rate-And-Term Refi
• What You Need To Know About Refinance Mortgage Rates
• Basic Eligibility Rules for FHA Mortgages