Simple FHA refinancing is a simple process. You can add closing costs and prepaid costs to the loan, as long as you don't make the loan exceed. You can add closing costs and prepaid costs to the loan, as long as you don't make the loan exceed 97.75% of the value of the home based on a current appraisal. This makes the option good for people who don't want to pay out-of-pocket closing costs.
For the most part, the fha streamline works like any other refinancing product. You apply for a new FHA mortgage, usually with a better interest rate and a lower monthly payment, which replaces your current loan. Your current mortgage must be backed by the FHA to use this program. To refinance an FHA loan, you must qualify for the FHA loan or another type of loan.
We'll go over some of what's needed to qualify for individual types of home loans a little later, but for now, let's talk in general terms. An FHA cash refinance replaces your current mortgage with a new, larger FHA loan. The difference between what you owed on your mortgage and the new, higher loan amount provides the cash. An FHA Streamline is the quickest and easiest way for FHA-insured homeowners to refinance their mortgages with today's low mortgage rates.
This is why, when exploring an optimized FHA refinance, you should also look for other home refinancing options, including conventional mortgage loans through Fannie Mae or Freddie Mac. If paying less (or more) each month sounds good to you, you're a good candidate for rate-and-term refinancing. Another net tangible benefit allowed is refinancing from an adjustable-rate mortgage to a fixed-rate mortgage. A simplified FHA refinance makes it easy to refinance an FHA loan because it doesn't require a new FHA appraisal.
Let's see how each type of refinancing works, what the requirements are, and how you can get started. Still, there may come a time when it makes sense to refinance your mortgage to lower or eliminate the IPM, lower your rate, change your term, or withdraw cash. For example, you might see an interest rate of 4.375 percent for a 30-year FHA refinance, which seems like a good deal. If your current mortgage is an FHA loan, you'll have most options, but it's not a requirement.
However, if you use FHA simplified refinancing within three years of opening your loan, you will be reimbursed part of your original UFMIP fee, which will reduce the total amount of the mortgage. FHA Streamlines aims to help you reduce your mortgage payment, so if you're interested in withdrawing cash, you'll need to choose another type of loan. You may be able to get approved for an FHA refinance with a lower credit rating or a higher debt-to-income ratio than what a lender would seek in a conventional refinance. Since 1934, FHA has been helping people become successful homeowners, and FHA mortgages are as popular as ever with homeowners and first-time homebuyers.
The big benefit of an optimized FHA refinance is that you can change your FHA loan at a lower rate and monthly payment.