FHA Refinance | Mortgage

By ConnieSanders
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Many people do not realize that FHA mortgage rates are equal to and sometimes even lower than a Conventional mortgage. Homeowners who would like to consider lowering their payments or getting out of an adjustable rate mortgage should seriously consider one of the FHA refinance programs. There are three types of FHA refinance loans: Streamline Refinance, No Cash-Out, and Cash-Out.

The streamline refinance has several variations. It can be done with an appraisal or without one. Under some situations the owner does not have to requalify for the mortgage. No cash-out is allowed with this loan.

Type of Loan Conversions:

1. 30 yr fixed rate to 30 yr fixed rate: The new payment must be lower.

2. 30 yr fixed to 15 yr fixed: New payment cannot be more than $50 higher. Note: 15 yr fixed to 30 yr fixed is not allowed.

3. Fixed Rate to ARM:

4. ARM to Fixed Rate

5. Adjustable to Adjustable

6. 203k to 203b

FHA Streamline Refinance "Without" An Appraisal:

The new loan amount may not be more than the original loan amount, OR more than the current principle balance plus closing cost, ... Whichever is less. This only applies to owner occupied properties as non-owner occupied borrowers can only refinance the existing balance, and do not have the option of rolling in the closing costs.

The only credit verification required is a verification of mortgage payments. This can be done with 12 copies of cancelled checks, front and back. IF cancelled checks are available, no in-file report is required unless the underwriter prefers that method to verify mortgage payments.

Streamline Refinance "With" An Appraisal Required:

A FHA streamline refinance with appraisal allows the homeowner to finance the closing costs, points, and prepaids if all fits within the loan to value limits. The loan amount may be the current principle plus closing costs, points and prepaids, OR, the appraised value x 97.75% (97.65%, or 97.15%, high or low cost state). Whichever is less!

IF the smallest of these two values is greater than the original mortgage balance credit verification is required.

Streamline Refinance - "Credit Qualification Required":

The loan is calculated based on the previous formulas. Qualifying requires full employment verification, credit report, and debt to income compliance. These loans are used when the new mortgage payment will be higher, deletion of a borrower on new mortgage, or in assumptions involving due-on-sale clauses.

FHA "No Cash Out" Refinance:

This FHA no-cash-out refinance can be used to refinance a FHA mortgage, a VA mortgage, a conventional mortgage, or a non-conforming mortgage and requires the borrower to fully qualify. Second mortgages may be included in the new loan if they are older than one year, if not older than one year, you must prove that the funds were used solely to repair or rehabilitate the home. If not, paying off or including these loans would be considered a cash-out refinance.

This loan can be used to buy out the equity of an ex-spouse provided it is documented in the divorce papers. It is still considered a no-cash-out because this equity is considered indebtedness.

IF the property was purchased less than a year ago and is not currently an FHA loan, the loan amount will be the appraised value plus closing cost, OR the original sales price plus closing cost. Whichever is less!

If the home purchase was more than a year ago and not currently FHA, the mortgage amount will be calculated the same as a "streamline refinance with an appraisal".

FHA Mortgage "Cash Out" Refinance:

This great loan can be used to refinance a FHA loan, a VA loan, or a Conventional loan. The advantage: Max loan to value is 90% for conventional loans but FHA loans allow 95% plus a portion of the closing costs.

About the Author

Connie Sanders owns a very educateative web site that was created to educate the consumer of fha underwriting guidelines. The knowledge they aquire from her site will help them understand the loan process and prevent them from being taken advantage of. For more educateation go to: fha underwriting guidelines http://www.fha-underwritingunderwriters.com

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