FHA home refinance loans: Potential solutions for homeowners

Refinancing your home can be difficult but may not be impossible if you owe as much or more on your mortgage than your home is worth. FHA offers home loan refinance programs requiring less home equity than conventional refinancing options. Here's a glimpse of FHA refinance options that may help with refinancing to today's lower (but rising) mortgage rates. Using our mortgage refinance calculator and mortgage comparison calculator can help with finding refinancing options best for your circumstances.

FHA home refinance options

The FHA insures approved mortgage lenders against losses from loans originated through FHA home loan programs. FHA requires lower down payments and offers flexible loan approvals that may help with refinancing your mortgage to more favorable terms.

  • FHA to FHA "streamline" refinance: This program expedites the refinancing process for homeowners wishing to refinance to lower mortgage rates. Your mortgage payments must be current, and you may not take additional cash from an FHA streamline refinance.
  • Standard FHA refinance: This type of refinance mortgage is available to homeowners with conventional mortgages wishing to refinance to an FHA home loan. FHA guidelines allow higher loan-to-value ratios, which is helpful for refinancing homes that have lost value.
  • FHA short refinance program: This option is intended for homeowners who owe more on their homes than they are worth, but the catch is that your existing lender must agree to reduce your current mortgage balance by a minimum of 10 percent. Contact your mortgage company or an FHA -approved lender to learn more about the FHA short refinance option.

FHA refinance mortgage: Easier qualifying, but no free ride

FHA loans allow higher loan-to-value (LTV) ratios which can make qualifying for refinancing possible for "underwater" homeowners. Benefits of FHA mortgages also include less strict qualifying guidelines, but FHA does require full documentation of employment and income. FHA loans require the additional cost of up-front mortgage insurance (UFMIP) paid at closing or rolled into the mortgage amount along with annual mortgage insurance premiums that are pro-rated monthly and added to monthly mortgage payments. Using mortgage calculators for comparing home loan options can help with deciding whether FHA or conventional refinancing works best for you.









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