A Guide To Refinancing When You Have An FHA

A Guide To Refinancing When You Have An FHA

Current mortgage rates make refinancing a good deal for many homeowners. If you own your home and have an FHA mortgage, getting another FHA mortgage will make the whole process much simpler. Unless you're facing serious credit problems or your home has lost value, you can easily reduce your housing costs with a simple streamlined refinance.

Keep Things Simple

An FHA-backed mortgage can be easy to refinance with another one. If your mortgage is brand new, you may already have the best rates. Do be aware that there will be closing costs. Additionally, a streamlined mortgage can't be larger than your first loan. If your financial situation has changed radically for the worse, your payment history can get in the way of an effective refinance. If there's a chance of you having to miss any mortgage payments, act fast on your streamlined refinance to lower your payments while you rebuild your savings and your credit.

Smart Ways To Use The Funds

Your refinance can free up funds each month by lowering your payment. If you need extra money each month due to a change in your family size and needs or your work situation. Do your best to put this extra cash to the highest and best use for you and yours; if you're not great at budgeting, this refinance may eventually be more costly than you expected. These refinance may also cost more for now but save you money in the future. Even if you don't need a refinance, now is a good time to consider refinancing for a shorter term. Even if you still have to pay PMI, or private mortgage insurance, for the time being, you can save thousands of dollars over the life of a loan with a 15-year mortgage instead of a 30-year mortgage.

The FHA Supports The Homeowner

The Federal Housing Administration insures FHA mortgages. These mortgages are easier to qualify for than a commercial mortgage and they offer lower rates than many banks. If you already have an FHA mortgage, the FHA streamline net tangible benefit could be the simplest and most cost-effective method of refinancing. If you and your home have already been approved for an FHA mortgage, it may be the right time to look at current rates and refinance your home. For example, you can

        shorten the term of your mortgage for a similar payment

        consolidate debt and lower your monthly payments

        pull out cash and improve your current home if you have enough equity

Now is also a great time to lock in your rate!

Even A Small Drop in Interest Will Save Over Time

If your credit rating has gotten better since you first qualified for your mortgage, check out your options with a streamlined loan. If you have a 30-year mortgage right now, a 15 at a lower interest rate could cost exactly the same and cut your payment schedule in half. Do be aware that these credit checks may be hard pulls. If you're considering getting pre-approved for a non-FHA loan, make sure that these credit checks will be what is known as a soft pull. Credit checks can lower your rating and get in the way of all the hard work you did to raise your score. If you're working with a mortgage broker, make sure they are only gathering soft pulls for pre-approval until you know if you qualify for a streamlined mortgage.


Current homeowners are ideally suited to improve their financial situations right now. If your personal finances can benefit from lower payments, shorter terms, or less interest overall, a streamlined mortgage can make this process simple.

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