FHA Loan Refinancing Information

One of the most cost effective ways to save money as a homeowner is to refinance your mortgage when interest rates change in your favor. 

The best way to keep track of interest rates is to check financial websites monthly.  Once a decreasing interest rate trend is detected, check the sites weekly and possibly even daily. 

Your broker should be able to lock you into a rate that you mutually establish as a threshold target for refinancing your existing mortgage.  FHA also permits streamlined refinances on FHA insured mortgages.

Streamlined FHA Refinance Mortgages

When a lender has to do less paperwork and process this can save you money as a home owner.  When the amount of documentation and underwriting that a lender must accomplish to refinance a home mortgage is reduced, it is referred to as a “streamlined” refinance option.  There are still fees associated with the refinancing transaction but overall costs are reduced.  

Streamline FHA refinancing requires the following:

Your loan needs to be a FHA insured loan.

Your loan should not be delinquent.

Demonstrated result of reduced monthly principal and interest payments.

Cash cannot be realized as a result of the process, only reduced payments.

Streamline Refinances and Lenders

There are several options for lenders to offer this type of FHA mortgage refinancing.  For instance, you may be able to find a lender that will charge you not out of packet expenses by charging higher interest rates on the refinanced loan. 

Closing costs that are a result of the refinanced loan are then paid by the lending institution.  Lenders may also offer a refinanced FHA loan with all closing costs wrapped into the new mortgage.  You must have accumulated sufficient equity in your current mortgage to enjoy this type of refinancing. 

An appraiser can also be involved to document the current equity in your home and chart the future value of your home relative to the newly refinanced home loan. 

It is possible to refinance your FHA insured mortgage without a home appraisal.  In this case, your newly refinanced home mortgage dollar amount cannot exceed the original value of your current mortgage.  If you do not reside in the property that is being refinance, this is your only option.

Appraising HUD Refinances

Appraising refinances, as implied, requires a home appraisal that includes all of the relevant repair needs and current condition of the home factored into the FHA insured mortgage. 

Up to 500 dollars cash, but no more, can be realized from refinancing your current FHA insured mortgage.  These mortgages can be insured with or without an official appraisal.  Certain lenders may, however, require that identified home repairs be completed as a condition of the appraisal.  In some cases, the borrower pays out of pocket cash for an appraisal that is required by a certain bank.          

FHA “Underwater” Home Refinancing

Recent difficult economic times and the national collapse of the real estate market have prompted HUD to create new options to keep people in their current homes. 

There is a new program to help responsible homeowners who owe more on their mortgage than the value of their property.  HUD has made adjustments to their FHA refinance program that has enabled lenders to provide additional refinancing options to borrowers who owe more than their home is worth.  

The Federal Housing Administration (FHA) will offer certain “underwater” non-FHA borrowers who are current on their existing mortgage and whose lenders agree to accept at least ten percent of the unpaid principal balance of the original mortgage, the opportunity to apply for a new FHA-insured refinanced home mortgage.  

This new FHA “Short Refinance” option is focused on homeowners who owe more on their mortgage than their home is worth.  This is referred to as being “underwater” because their local markets underwent significant declines in home and property values.

These new changes and other programs that have been put in place and will help the HUD and FHA realize its goal of stabilizing housing markets by offering a second chance for millions of homeowners in the United States.

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The official U.S. Government FHA Web site is HUD.gov