The interest rates today are not what they were five or ten years ago. They have hit a record low and have been hovering there for a while now. As a homeowner, you may want to take advantage of the low rates, but you may not think you can qualify because of your credit. While it may be difficult to qualify through a conventional lender, through FHA sources it is often possible when it wouldn’t be otherwise. There is a variety of loans available for struggling homeowners through FHA programs. Giving you the opportunity to take advantage of the low rates.
Refinancing When You Already Have an FHA Loan
If you already have a mortgage that is owned or controlled by an FHA lender, doing a streamline refinance may be your best option. The streamline is in place to simplify the refinance process for homeowners. A lot of the paperwork and documentation that is required for a traditional refinance are waived with the a streamline. You benefit from this option in multiple ways. First, you don’t have to worry about getting an appraisal or providing all of the financial documentation you did the first time around. Your lender will let you know what documents are necessary to be approved. Each refinance company is different.
A second benefit of the streamline, aside from the ease of acquiring it, you don’t have to be in a prime financial state to meet the qualifications. The basic requirements for the streamline refinance are that you are current on the mortgage payments, the mortgage must be controlled by the FHA, the refinance has to reduce interest rate and/or mortgage payment, and you cannot pull out any equity. Aside from that the qualifications are quite lenient. Homeowners who have experienced job and equity loss have still been able to qualify for the streamline program.
Short Refinance and HARP
Refinancing a mortgage is possible through more FHA programs than just the streamline. One of the refinance options available through Obama’s Making Home Affordable that is very beneficial for those homeowners who have experienced financial upset as a result of the economic downturn. Many homeowners found themselves in homes that have no equity, with mortgages that are more than their income can handle. Refinancing your mortgage through the short refinance program can help you regain control of the mortgage while maintaining control of your home.
Since the HARP and the short refinance are through FHA, you can have poor credit and still be able to qualify. FHA lenders specialize in working with individuals who don’t have the perfect financial setup, but who are responsible enough to take on the demands of the loan.
Both of these program requirements state that you must be current on your mortgage payments, and no late payments over the last twelve-month period. It’s also required that the refinance benefits you financially, meaning the new loan has a reduced interest rate and/or a reduced monthly mortgage payment. With HARP, you will refinance the full amount of the loan, and with the short refi your lender will forgive part of the debt and you’ll refinance the rest. HARP is not forgiving any debt so it is more than likely a little less taxing on your credit than the short option.
Through the FHA programs refinancing a mortgage is possible regardless of your credit. There are some cases where you will not be able to qualify for the refinance, but many homeowners have been able to get the financial help they need through FHA when a conventional is out of their reach. If you need to refinance and want the benefits of the interest rates today, it would be worth your time to discuss with a loan officer. Getting multiple quotes is a good way to get the refinance that will give you exactly the result you need at the most affordable rate possible.