FHA loans present a number of options to homeowners. For the recent homeowner who’s considering a refinance, there are some things to note before executing this plan. You have to consider all refinance options under FHA loans to help your financial situation. Here are a few ways to help the process of your refinance.
Some FHA Requirements
Before you discuss with a lender certain refinance options under FHA loans, find out what you need to obtain this plan. The website has a list of requirements you need regarding your income, mortgage, and equity. If you want your loan to process quicker, here are a few things you need to fulfill in your application:
- A list of the addresses you’ve previous lived in the past two years
- Your employer’s name and addresses for the past two years
- Your gross monthly salary
Use your W-2 form to help you clarify things to your lender. It’s a good source documentation that should have the majority of your information, and it’s smart to have copies on hand to answer the questions of lenders. You want to make sure to fill out everything completely so that it speeds up the loan process.
A Heads Up When Streamline Refinancing
If you decide to refinance with an FHA loan, the federal streamline option may be the plan to choose. Here are a few things you need to fulfill before you begin your refinance. First of all, you need at least 90 days of on time mortgage payments. Lenders view this as a responsible borrower. A pretty good record shows you’re less susceptible to delinquencies and foreclosures. A lender wants assurance that you are a responsible borrower. A record of bad mortgage payments can easily weed out your approval. Even if you have one missing payment in a matter of 12 months, you want to do your best clear it up before refinancing. Also, you should note that refinancing in this manner entitles you to lower mortgage payments.
Why Is an FHA Cash Out Refinance Beneficial?
If you have a great credit and equity situation, take advantage of what a cash out refinance has to offer. Even though it costs a small fee to check your credit report, it may be wise to see your record before refinancing. Any marks on your credit can easily halt the process of refinancing. To qualify for a cash out plan, you need a credit score of 580 and an equity of at least 3.5%. If you don’t have a credit score of 580, you need at least 10% in your home. If a lender has to assume your costs, you’ll easily pay a higher interest rate that will put your mortgage balance in limbo. Since you have more freedom in your equity to actually borrow in the form of getting a cash sum, lenders take more risk. This means you really need to be on top of things to ensure that your lender trust you. Also, lenders will give you more fees such as appraisal and repair fees to ensure that your home meets safety and health requirements by federal government standards. Find a person who can do the repairs at a reasonable price and abides by rules imposed by the federal government. This way you’ll be able to invest in your primary property and any additional properties that are livable by potential occupants.
Talk About Your Options With Different Lenders
This is very important because the decision you make now affects your finances 15 to 30 years down the road. Consult a number of lenders who will help you in your refinance choices. They will help you become aware of all the different fees and rates you’ll have to pay. Also, they can suggest a different refinance options based on your request and your actual financial prowess.
Take caution to certain refinance options under FHA loans. You never want a refinance to lead you into a dead end mortgage. Each option has risks as well as rewards. It’s your job to find the best solution that fits your circumstance.