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
September 8, 2023Borrowers considering an FHA loan should be familiar with some basic loan terminology. These loans are popular among first-time homebuyers and those with lower credit scores because they often offer more flexible eligibility requirements and lower down payment options.
September 2, 2023You may have heard the terms co-borrower and cosigner in connection with your FHA loan process, but aren't sure about the distinction. Both a co-borrower and a cosigner can help a primary borrower qualify for a mortgage, but they have different roles and responsibilities.
August 27, 2023The Federal Housing Administration has specific credit requirements and guidelines for borrowers looking to buy or refinance homes with an FHA loan. In addition to what FHA guidelines state, lenders may have more stringent requirements that may vary from one lender to another.
August 23, 2023Mortgage APR (Annual Percentage Rate) and a loan's interest rate are two different things, although they are closely related. Understanding the difference is an important part of a borrower's analysis of the true cost of their mortgage.
August 19, 2023FHA refinance loans allow homeowners with existing FHA loans to refinance their mortgages. These loans are designed to help borrowers take advantage of lower interest rates, reduce their monthly mortgage payments, or access equity in their homes for various purposes.
August 14, 2023FHA loans typically require a minimum down payment of 3.5% of the purchase price of the home with the right credit score. This means that if you're buying a house for $240,000, you would need to make a down payment of at least $8,400.
