Using FHA refinance home loans for your financial situation is a bit different than a conventional loan method. Many homeowners opt to go about this particular service rather than a conventional way because it doesn’t require perfect credit, equity, or a long list of paperwork to stall the process. Is your home under federal government loans? Why not choose this method to make things a lot easier. Here are some ways to help you refinance your home.
Complete the Process of Acquiring Federal Loans (FHA requirements)
If you aren’t already on a federal loan system, it’s not a hard or a long process to take. In fact, you can go about the process by downloading a PDF right on the official FHA site. To apply for the loan, you want make sure your information is thorough so lenders will see you left no stone unturned. This way you ensure a faster application approval. Start by listing all of the addresses you’ve previous lived in the past two years, your employer’s name and addresses for the past two years, and your monthly gross salary. It gives you a sense of proof regarding good document for lenders to see your stability. You should also have W-2 records on hand as well as submitted taxes for the past two years. Always make copies just in case your lenders has questions. It’s very important to be able to prove your trustworthiness.
Keep Current On All Your Payments
This honestly goes without saying, but a spotless record speaks volumes. Think of the lender in this case. Why would I want to let someone borrow my money if he can’t even keep up with his mortgage payments? This makes it harder to get acceptance from your lender. Also, make sure you can very well continue to pay on other obligations such as credit cards and student loans. If these type of bills take a considerable amount of income to the point of barely paying living expenses, you most likely won’t be approved to FHA refinance home loans. Why? Well, you’re already in some form of financial burden. Correct any late fees or show how you’ve changed your habits as a way to prove to your lenders that you’re responsible. You want to keep things singing a fine tune rather than an abrupt note coming from left field stopping your harmony.
You Have a Few Options Regarding FHA Refinance Home Loans
Another great thing about FHA refinance home loans are the options available. You always want an array of choices especially for your budget. Let’s say you want to lower your rates, but don’t necessarily want to use cash. You have an option called federal streamline refinance to help your cause. While you don’t have much say as far as the use of your equity, you don’t need an appraisal (which saves you money), you don’t have to go through a huge amount of paperwork, or need a high level of credit and equity for approval. If you have a good line of credit and your equity has grown to a good level in your home, choose a federal cash out refinance.
This is a great offer if you’re sure you can pay the fees off later from this refinance. You can cash your equity and use it toward school loans, your car, and even go on vacation to your dream destination. Remember, lenders want to incur the least amount of risk as possible. Make sure you have a solid credit score of at least 580, so you’ll only need 3.5% equity in your home. If you have less than 580, you’ll need 10% or more depending the score. Make sure you wait at least a year or so to refinance so you can build your equity. Also, a higher equity/credit means you won’t incur astronomical upfront and back end fees that multiply during a refinance. Additionally, your lender may request an appraisal to ensure your home meets the right safety/health requirements. This is especially important if you’re deciding to invest an additional property and plan to rent it out to others. It can get quite costly with repairs, but it also creates more value in the home. You could see more profit down the line. Nothing wrong with some extra greenbacks!
Utilize your FHA refinance home loans in a way that doesn’t disrupt your lifestyle. Plan ahead to ensure a good payment plan to pay back your new mortgage from refinancing. Also, talk with the right lenders who still steer you to a reasonable path of refinance rates.