FHA Simple Refinance
With an FHA Simple Refinance, homeowners with a current FHA Loan can refinance into a new one, whether it's a fixed-rate loan or an ARM. The Simple Refinance has no cash-out option and is the most straightforward; lenders require a credit qualification, which is the process of analyzing credit, income, and assets to ensure the borrower meets the requirements for the new loan terms. There is also a home appraisal, to assess the current home value. With an FHA Simple Refinance, the new loan amount can include all closing costs and prepaid items, as long as the amount falls within the appraised value.
Who Can Apply?
It might seem obvious, but to qualify for an FHA Simple Refinance, there must be a calculable benefit from refinancing. A Simple Refinance is only applicable on an owner-occupied principal residence or HUD-approved secondary residences. Borrowers must also be current in their loan payments for the previous 6 months to be considered eligible for a refinance.
Benefits of Refinancing Your Home
Refinancing some time and money on your part, so it's important to ask yourself if you'll be benefitting from the process. Here are some of the reasons borrowers choose to refinance their homes.
- Lower interest rates mean a smaller monthly payment. If you're in need of a little more disposable income every month, refinancing for a lower rate may be to your benefit.
- Borrowers can even look into switching from an ARM to a fixed-rate loan to lower their monthly payments. After the introductory period of an ARM, your interest rate may have risen drastically. With a fixed-rate loan, you'll always know what you owe month-to-month, giving you more peace of mind.
- Some homeowners who find themselves in need of cash at short notice, choose to borrow cash against their home equity with a Cash-Out Refinance. Despite the additional, long term cost of a Cash-Out Refinance, it is a good opportunity for homeowners who need instant funds for renovations, bills, or emergencies, without having to sell their home.
FHA Loan Articles
January 27, 2023Before you get ready to commit to a home loan application, it’s good to review your circumstances and ask a few basic questions about your loan, your plans, and the home itself. Believe it or not, knowing what type of home loan you need is an important step.
January 10, 2023When getting ready to shop for a home loan, it's worth taking a look at your credit report. Your credit score is a big factor when lenders take a look at your loan application, and it plays a huge role in the interest rate you get.
November 8, 2022The fact is that repairs and renovations to your home cost a lot of money. Luckily, the FHA has an option for those with fixer-uppers on their hands. The FHA 203(k) Rehabilitation Mortgages allows borrowers to finance the funds for renovations to a home.
May 7, 2022The appraisal process is a very important part of buying a home. When you are budgeting and planning for your loan, you may want to set aside some extra funds in case there are corrections required as the result of an appraisal.
March 30, 2022Once you’ve decided that you’ll be purchasing a home, one of the first questions you need to ask yourself is what kind of mortgage you’ll be using to finance it. When it comes to shopping for a home loan, there are a number of options to consider.
March 3, 2022Savvy homeowners make it a point to monitor interest rates so they can take advantage of a drop. Many choose to refinance their mortgages to capitalize on falling rates and lower their monthly payments and save on interest.
