| An FHA (Federal Housing Administration) refinance | | | | homeowner. When you are shopping FHA loans, |
| can be a great option for people in various scenarios. | | | | always compare the fees in the disclosures when |
| There are two types of FHA refinancing loans: 1.) cash | | | | deciding on a FHA lender. |
| out refinancing and 2.) streamlined refinancing. In either | | | | In cash out refinancing FHA refinance the home owner |
| scenario the home owner must have some equity in | | | | usually has a home that has increased in value. The |
| their home to be able to participate in such a plan. In | | | | refinance can take place if the home owner |
| addition, they must also use the home as their primary | | | | purchased the home a year or more ago. They are |
| residence to qualify for the refinancing. Refinancing | | | | able to take out the refinance loan for more than what |
| allows a person to benefit from the investment they | | | | they owe on their home (up to 85% of the appraised |
| made on their home allowing help in many different | | | | value of the home plus closing costs), so they can pay |
| stages of people's lives. Some use the FHA loans for | | | | back their original mortgage, end up with a new |
| cash out refinances in an effort to send their child to | | | | mortgage and have money to spare. The extra |
| college, while others use the money for home repairs. | | | | money is actually the equity that the homeowner has |
| Other examples of how the loan can benefit someone | | | | built up over the years in their home. After their equity |
| are special vacations, and even consolidating other bills. | | | | has basically turned into money, they can use it for the |
| FHA refinancing differs slightly from conventional | | | | needed use at the time. |
| refinancing loans. A person's income and credit will be | | | | With a FHA streamline refinancing loan the current |
| viewed more leniently or not at all with an FHA | | | | mortgage's interest rate can be cut without an |
| refinance. FHA refinance loans allow bad credit | | | | appraisal in most cases and with minimal paperwork. |
| refinancing. FHA guidelines evaluate the "big picture" of | | | | Credit checks and job verifications are not looked at |
| the borrower's credit history, so if there are isolated | | | | to qualify for these loans, but the existing loan on the |
| incidents of credit problems, they are often over | | | | property must be an FHA mortgage, the refinance |
| looked. The credit qualifying guidelines are also much | | | | must decrease the homeowner's monthly interest |
| more relaxed with a FHA loan even with past | | | | payments and the loan has to be in good standing (no |
| bankruptcies and foreclosures. | | | | late payments within the last year). The streamlined |
| The fees will also be lower with a FHA refinance loan | | | | refinance does not have the option of receiving cash. |
| including closing costs and private mortgage insurance | | | | Its best purpose is to lower someone's monthly |
| (PMI). Closing costs are regulated with FHA loans so | | | | expenses. |
| the bank cannot charge an excessive amount to the | | | | |