How to Qualify For a FHA Refinance

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Consider a FHA Refinance If You Plan to Stay in Your Home For the Next Five Years.

With an FHA refinance, underwriting guidelines are less strict than conventional mortgage loans. When a lender reviews an application for an FHA insured loan they will be more flexible when considering household income and debt-to-income ratios. See the Bills.com resource FHA Loan Requirements to learn more about qualifying for an FHA loan.

Streamline FHA Refinance

Streamline FHA refinancing refers to a process that requires less documentation than a traditional refinance. The general requirements for a streamline FHA refinance according to HUD are the following:

• The mortgage to be refinanced must already be FHA insured.
• The mortgage to be refinanced should be current (not delinquent).
• The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
• No cash maybe taken out on mortgages refinanced using the streamline refinance process.

Some lenders offer no out-of-pocket expenses to a borrower, also known as "no cost" refinancing. However, the "no cost" is offset by charging a higher interest rate on the loan. The borrower may avoid paying out of pocket for closing costs by adding the costs to the loan total loan amount. If a borrower chooses this option they can feel comfortable knowing that it is not typically considered a cash-out refinance. Therefore, a borrower should have no problem completing a streamline FHA refinance.

How Do I Apply

Start by contacting your lender to confirm that they are still an FHA-approved lender and offer streamlined refinancing. If you're able to refinance through your current lender, you may be able to avoid some fees, such as title insurance. If your lender doesn't offer FHA refinancing, contact additional FHA-approved lenders for help refinancing.

How Long Does FHA Refinancing Take?

A streamlined refinance is usually takes much less time than either a new mortgage on a new home or a conventional refinance. Some can be closed in as little as two weeks, but times vary. Your lender can advise you about the timeframe and what is expected of you during the process.

How Do I Know If Refinancing Is Right For Me?

Only you can decide whether refinancing your mortgage is the right choice. If you currently have a high mortgage rate or an adjustable-rate mortgage that will soon adjust to a much higher rate, then refinancing could save you money. It may also be worthwhile if you can reduce the interest rate slightly and plan to stay in the home for several more years.

However, if you plan to move in a few years, the costs of refinancing may be more than you would save by continuing to pay the mortgage at the current rate.

Can I Do A Streamlined Refinance If My House Is Worth Less Than The Loan Balance?

It may be possible if you choose to pay costs at closing in order to avoid an appraisal, but only a lender can tell you whether you are likely to qualify for a new loan in this circumstance.

The FHA refinance program has helped thousands of homeowners reduce their interest rates and mortgage payments quickly and easily. Contact a lender today to see if you qualify.

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