An FHA home loan for a refinance is the way to go for any borrower. You don’t have to have an FHA loan currently to get one. For many years, FHA loan refinancing was viewed as a program that was used for those who had average or less than average credit. Understanding what it takes to get an FHA loan and the process for the refinance is important.
An FHA home loan can either be done in what is called a streamline or a cash -out loan. The streamline FHA loan refinancing allows you to refinance the loan, and take some cash out if you want to pay off debt, but there are some guidelines associated with it. A refinance option will allow you to take up to 97.75%. These limits are just simply a guideline to prevent another economic crisis like what we are having now. These limits also will prevent you from going into a payment that is much larger than what you may have right now.
Any loan that is not currently an FHA home loan can certainly be refinanced to an FHA loan, so long as the borrower qualifies according to the FHA guidelines. In order to determine what your debt load is, they will look at what you owe on the home and your existing debts outside of that. It is always important to know what you can afford. Many people are always quick to take a look at the maximum that they can borrow, which is the wrong place to start. FHA loan refinancing takes a close look at the factors that tell the lender if you can afford the loan, and if you are likely to be able to pay in the future.
Consider that when your pay off from your current home loan comes in, it may include any unpaid interest calculated through the end of the month, and will include any late fees that were tacked onto your loan from the past. Escrow shortages can also account for this final payoff, so be prepared to consider how you want to refinance your loan before you start the process. Your FHA home loan will provide you with the experience of how your loan process should be handled, and will show you what you have been missing. The process of FHA loan refinancing is very different from other loans, so be prepared and know what you need up front.