If you start your payments on an FHA loan and you need to lower your interest rates, you could consider the FHA Streamline Refinancing because it does not require any credit report or income verification unless your lender requires it.
There are some important reasons to consider your FHA refinance options, for example if you are paying more than anticipated per month and you have an adjustable rate mortgage or if you have the risk of going into foreclosure on your current loan, but an FHA home loan is not an option for everyone because you need to provide your lender certain income requirements.
You should know that there are different types of FHA refinance loans such as Cash-out refinancing up to 85% of the appraised value, refinancing for up to 95% of the appraised value, No cash-out refinancing and Streamline FHA refinancing. For cash-out refinance you require to own the home before applying (for at least a year).
How FHA works?
The FHA (Federal Housing Administration) doesn’t actually make loan, this is a division of the Department of Housing and Urban Development. It just guarantees the repayment to private lenders even if you default. Obviously, you will pay for that guarantee with a monthly mortgage insurance premiums.
But it is important to consider that there are maximum loan limits for FHA loan per year. For example, in the present year they borrowed up to $271,050 for single-family homes in most places of United States or up to $625,500 in high-cost cities.
Calculation of the refinancing loan
The lending limits for cash-out refinancing is very simple once you determine the home’s appraised (85% or 95%). Nonetheless for no cash-out refinancing the calculations are a little bit more complex and you should ask your lender to answer any doubts.
FHA Streamline refinancing loans are exclusively for those people who already have a FHA loan and there are two Streamline refinancing loans.
Refinance works with an FHA loan
You can refinance some types of mortgages with an FHA loan, even if you have a higher debt or a small and damaged credit score, because lenders usually will accept it. You may be accepted to refinance with an FHA loan even if you are currently unemployed.
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