Refinancing Opportunities through FHA

In this, the second in a series of three of an overview of what FHA can provide, I will address the various ways that FHA financing can be used to your benefit in refinancing.

First, FHA interest rates are generally comparable with conventional/bank rates. In addition, you can qualify for an FHA refinance with as little as a 580 middle credit score.

On a refinance intended to reduce either the interest rate or the term on your current mortgage, i.e., no "cash back" at the settlement, you are permitted to finance up to 97.75% of the appraised value of your home. If you would like to consolidate your debt, or even take "cash-out" to fund some improvements on your home, or actually for any purpose, you can qualify for a refinance amount equal to a maximum of 85% of the appraised value. In both of these programs FHA is, far and above, the most aggressive loan program available.

FHA also offers a program called a "Streamline Refinance". This program is for customers who currently have an FHA mortgage who would like to improve the terms of their loan. Under the guidelines for this program a current FHA customer may refinance to a lower rate or shorter term with no credit qualifying, no income qualifying, and no appraisal.

This means that, if you have made your monthly mortgage payment in a timely manner, you can be approved to improve your terms regardless of your other credit. No income qualification is required, therefore the only necessity is that your lender verbally verify with your employer that you work there. Last, there is no requirement for a new appraisal; not only does this save the added expense of a new appraisal, it eliminates any worries regarding possible value decreases or property condition problems.

So any time you are considering refinancing your current mortgage, remember to keep FHA in your thinking; it can really come in handy.

Call any of your excellent local FHA lenders for assistance or to answer your questions.