The Federal Housing Administration is a government program created for the purpose of helping homeowners get into homes and keep the homes they have. It was formed during the Great Depression in an effort to combat the economic collapse happening during that time. Over the years many programs have been put into place under the Federal Housing Administration, all of which are designed to help homeowners. Some of these programs are refinance programs. Within the Federal Housing administration there are multiple FHA refinance mortgages available to homeowners of all different types of situations. Here are some of those that homeowners today are taking advantage of.
Streamline Refinances and Cash Out Options
The Federal Housing Administration is well known by Americans as a way for homeowners with imperfect credit to qualify for home loans. It is also well known for its signature streamline refinance program, which is an option only available to homeowners with existing FHA loans.
The beauty of streamline refinances is that they do not require as much paperwork as the other refinances. For many of them, the appraisal can be waived as well. There are no streamline options through conventional lenders, and all of the other refinance options through the federally insured lenders do require the full gamut of paperwork and appraisals.
The streamlines purpose is to make it easier for homeowners to refinance and reduce their mortgage payments and interest rates wherever possible. In order to qualify for this particular refinance you do have to show your financial history and work history and your credit score will be pulled and taken into account for the loan. In addition to this, you cannot pull cash out with a streamline and the new loan has to reduce your mortgage payment. If it is not able to do this for you than you won’t be able to qualify.
A second common refinance for FHA homeowners is the cash out option. This refinance does require all of the paperwork, inspections, and appraisals that are required by most refinances, and you will have to provide your financial information, work history, and credit score as you would with the streamline. This is protocol for basically all refinances. The difference between the cash out and the streamline is simply the fact that you can pull out your equity with the cash out and you can’t with the streamline. The cash out option does increase your mortgage, of course, where as the streamline shouldn’t impact it, unless you roll your closing costs into the final mortgage. Both of these refinances are great options for homeowners who are in a good place financially and who want to improve the financial investment with their home.
New FHA Refinance Mortgages – HARP
Another of the FHA refinance mortgages is the home affordable refinance. This refinance is a new creation of the Obama administration. It was created as part of Making Home Affordable. Started in 2009, this program was specifically designed for homeowners who are underwater on their home mortgages and who are struggling to make ends meet. Whereas most lenders refuse to consider a refinance on a home that has little or no equity, with the Home Affordable Refinance Program, you now have the option to refinance despite your equity situation. By using these FHA refinance mortgages you are able to reduce interest rates and mortgage payments which can help you regain control of the mortgage. Prior to this program, homeowners underwater on their mortgages had very little they could do except flounder to pay for it or consider a short sale or foreclosure.
In order to qualify for the HARP program your loan has to have been acquired by a Freddie Mac/Fannie Mae lender prior to May 31, 2009. You must also be current on all of your mortgage payments, with no payment over the last twelve month period being more than thirty days late. You also need to show that you have less than eighty percent equity; most homeowners using this program will have very little if any equity. Last, the loan has to be conventionally controlled. Unfortunately, this program isn’t available for homeowners with existing FHA loans.
Here is a really good website to look more into details for the HARP programs when it comes to FHA refinance mortgages.
There are many refinance programs that you can take advantage of through federal lenders. These are just three of those that are quite common today, particularly the streamline and the HARP which are great resources for homeowners who want to reduce interest rates and home mortgage payments. When you decide it’s time for a refinance, take these options into consideration and be sure to discuss with your loan officer whether any of them will work for you.