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
November 2, 2021Interest rates started to decline in 2019 and still seem considerably low. The average rate for a 30-year, fixed rate home loan has fallen from 4.94% in November 2018 to 3.13% in October 2021. A point drop in your interest rate could translate to huge savings with each monthly payment
October 30, 2021The FHA Rehabilitation Loan program allows lenders to cover the purchase or refinance, as well as the rehabilitation of the home, as part of a single mortgage. This loan can be used to finance a property that is at least one year old with a total cost of repairs amounting to at least $5,000
July 30, 2021The FHA Streamline Refinance allows mortgage holders to refinance their home loan without going through the process of second appraisal. Since this is a step that was completed with the first FHA mortgage, the FHA waives it for the refinance
July 14, 2021Making the decision to buy a house is a big one, followed by the choice of which house to buy. The next biggest decision you make is going to be the type of home loan you need to go through with the purchase. One option for financing your home is an FHA loan.
May 24, 2021With historically low interest rates, the mortgage industry has seen a sharp uptick in refinances. Taking advantage of the current market might be in your best interest and could lower your monthly payment significantly. Don’t forget that refinancing a mortgage comes with closing costs.
April 11, 2021With the trend of falling interest rates since 2019, the number of mortgage refinances around the country has spiked and continues to rise. Borrowers with FHA loans can also capitalize on the low rates, but it may be possible to simplify the process with the FHA Streamline Refinance.
