FHA refinance programs allow for a number of different options to save money on your mortgage. Whether you currently have an FHA loan or are looking to move from a private loan to a federally-guaranteed option, you can consider FHA loans as a way to reduce your payments and interest rates.

Types of FHA Refinance Options

There are three primary types of FHA refinance programs to consider. The first is a cash out refinance, which allows you to take a second loan larger than your current remaining mortgage debt. Once you pay off your current mortgage, the remaining sum is liquid for your usage.

The second option is the streamlined FHA refinance; this program is available to those individuals who already have an FHA loan seeking better options. Finally, there is a home owner relief option. This program assists those home owners in sub-prime, variable mortgages to refinance for a lower, fixed rate. While the benefits of this option are apparent, not all applicants will qualify. The program is limited to a very specific group of responsible borrowers who are victims of predatory lending.

Qualifications for an FHA Refinance

Regardless of which option you are considering, there are some basic requirements for any FHA home refinance program. The first is that your current loan must be in good standing. This simply means you are current on all of your mortgage payments. If you have had late payments recently, you may not qualify for the refinancing option.

You will also be required to meet basic credit and income requirements. Many people mistakenly believe the FHA makes loans to borrowers who are not necessarily qualified for private loans. This is untrue. The FHA, in fact, often has more requirements from you as a borrower. The key difference in FHA qualifications is the government may require less from you in terms of income and assets. The loans are aimed at borrowers with good credit records, but they do not necessarily only serve wealthy individuals.

Qualifications for Mortgage Relief

If you are looking to get out of a bad mortgage and need relief to avoid foreclosure, then you will have to meet further qualifications in order to receive the FHA's help to refinance. This foreclosure assistance program was originally put in place after the housing crisis in 2007 to help get borrowers out of sub-prime, adjustable rate loans.

The first requirement will be that you have a sub-prime, adjustable rate loan. You must also be current on your loan payments. However, if your loan is adjusting to a higher interest rate you may not be able to afford, then you are an ideal candidate for the relief program. Essentially, you will have to prove you could have afforded your mortgage if it did not adjust higher, and you will show that the jump in rate is the only factor preventing you from successfully making payments. If you cannot afford a mortgage based on your income, the FHA will not extend you a refinance option.

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