Types of FHA Refinance Loans

There are two types of FHA refinancing loan program. They are (a) the standard rate-to-rate refinance, and (b) the streamline refinance.

Rate and Term Refi

•  Refinancing any type of mortgage to an FHA loan to lower the interest rate, to shorten the financing term, or both, is what’s referred to as a “rate and term” refinance. It is a common knowledge that the interest rate of an FHA loan is quite lower as compared to any other loan programs in the market. It’s not uncommon to see conventional-conforming mortgage holders refinance to an FHA loan to lower the payment or term of the original loan.

Streamline Refi

• A streamline refinancing is refinancing an existing FHA loan to another FHA loan. There are different types of streamline refinance programs: (a) no credit, no appraisal; (b) full credit, no appraisal; and (c) no credit, full appraisal. When an refinancing an existing FHA loan to another FHA loan but requires both full appraisal and a full credit check, that is deem the same as a rate and term refinance.

When refinancing to an FHA loan, there are several things you will need for your application:

• Your last 2 years of residence;
• Employment information in the last two years;
• Income tax returns for the last two years along with W2s, 1099s, etc.;
• Two (2) months of bank statements;
• Full 30 days paycheck stubs.

Having all of these documentation handy will speed up the application process and will help achieve better results at a much faster pace.

If you are looking to refinance your mortgage but have minimal equity, the most appealing option to most borrowers is the rate and term refi. It will lower the current rate you are paying now and result in a lower monthly payment. You can change the terms of your loan without losing your hard earned equity.

FHA refinance allows loan-to-value of up to 97.75%. Compared to conventional loan that only allows a maximum of 95% loan-to-value, FHA is a better option.

When looking to refinance your home, look at all the options available to you. As FHA Loan Specialists, we are able to provide you with options. It is important that you find one that will fit your needs appropriately. By choosing either an FHA Streamline for an existing FHA loan or to go with a regular FHA rate and term option, you will be able to reduce your payment and build equity faster.

When applying, make sure you have all the required documentation handy. This will ensure that your application goes through with flying colors and close in a timely manner. Consult any of our FHA Loan Specialists to refinance your home. We will guide you every step of the way. Call us at 346-297-0516 for more information.