An FHA Refinance is a refinance of a mortgage which is insured by the FHA (Federal Housing Administration). There are plenty of wonderful options available to FHA home owners, read below to see what option fits you best.
This option is by far the most popular, and is a fantastic option for many homeowners. FHA has permitted streamline refinance insured mortgages since the early 1980’s. The streamline refinance refers only to the amount of documentation and underwriting required by the lender, and does not mean that there are no costs involved in the transaction.
2. Refinance Out of FHA
Nowadays FHA has incredibly steep mortgage insurance rates (in fact right now they’re at 1.35% and last the life of your loan) compared to conventional loans (which average around .7% for the private mortgage insurance ). This gives many people a strong incentive to refinance from FHA to Conventional as soon as they qualify.
One of the biggest hurdles in qualifying for a conventional loan is whether your credit is good enough. Conventional Loans make up about 75% of the mortgage market place and work using private mortgage insurance. Most private mortgage insurance companies require you to have a fico score of 650 or greater. Although you can skip private mortgage insurance altogether if your only borrower less than 80% of the value of your home.
The FHA cash out refinance was created to allow homeowners the ability to borrower against the equity of their home. FHA will insure cash out refinances up to 95% of the home’s current appraised value. Simply put; if your home appraised at $100,000 and you owe $70,000, then when you get an FHA cash out refinance you’ll borrower $95,000 to pay off the original $70,000 and keep $25,000 for yourself before taking out any closing costs.
Like the FHA Cash Out Refinance, this requires full qualification although is a fantastic option for getting really cheap financing for making your home more energy efficient. Think about it… Get a solar array and offset the cost of your electric bill