If you were in a previous refinance, dealing with a conventional lender and didn’t see satisfactory results, a new federal loan plan might help tremendously. There are a number of ways that this type of plan may suit your needs. For a homeowner that doesn’t like to go through so much paperwork and waiting time, this is definitely an option that can work in your favor. Here are some ways to help you prepare your refinance into an FHA loan.
FHA Requirements Are a Bit Easier to Follow
Convenience is a factor you should look for before you refinance under an FHA Loan. For a recent homeowner, they may want to acquire a new loan that doesn’t have so many rules and regulations. Of course, there are certain rules that all lenders impose on their borrowers. However, this situation is a bit more toned down. To qualify for a federal loan, you may have to give some information to your lenders such as your current address, your employer’s name and address, and monthly gross salary. Also, make sure you have information regarding your tax documents. Create copies of your W-2s to have on hand in case lenders have any inquiries.
Credit Qualifications and Mortgage Payments
Funding can get a bit tricky at this point. Lenders are expecting their money back in full and then some. It requires you to tread lightly in certain waters because you never know what’s on the other end. Before you are able to go through any type of deal, make sure your end is crystal clear. Keep your mortgage records clean and full of on-time payments. Although some lenders may let you get away with a few delinquent payments, you have to keep in mind that others may not be so sweet about it. The best way to impress your lender is showing a track record of on-time payments because it shows that you can handle the responsibility.
Another refinance method is federal cash out; this requires much better credit and equity. All those missed payments on your recent credit card purchase will add up. If you cannot handle your personal affairs, it’s hard to convince the lender that you have the type of collateral they’re looking for in a borrow. Also, you’ll put a huge financial burden upon yourself that can take quite some time to recover.
Federal Streamline is a Great Option for Refinancing Under FHA Loans
If you’ve been with a conventional loan, you know that there are higher rates to pay. A federal streamline refinance can help you lower these rates. If you have noticed a huge drop in the market value and you’re still dishing out the same high mortgage payments, this could help considerably. Make sure you have a stable record of income. As you build up the market value of your home and even find a new situation where you’re getting a better paying job, increase the monthly mortgage amount. This way you can start paying off the mortgage a lot faster. You don’t have to draw it out in a 30-year plan, and you’ll be able to save money. A streamline plan is a much quicker method of federal refinancing.
Open Up Your Financial Palate in a Federal Cash Out Refinance
Do you want to create more opportunities to help finance your dream vacation, invest in additional properties, or pay off student and auto loans? Make sure you build a quality credit score and equity percentage in your home. If you have a credit score of 580, then you only need 3.5 equity. If you have a credit score lower than 580, lenders will typically ask that you have 10% equity and more. Make sure you keep tabs on the different fees included in this refinance such as appraisals and repairs, which can be quite costly.
Refinancing with an FHA loan is a great alternative to a conventional refinance option. Seek out a number of lenders who can help you in this endeavor.