FHA Loan Refinance
It may be beneficial to refinance your loan if you’re looking to reduce your monthly payments or if you’d like to pull out some of the equity on your home. Refinancing is common in low interest rate environments. It may also be appropriate in instances where you can obtain more favorable borrowing terms due to a change in your financial status, such as an increase in your income level, credit score, etc. FHA’s refinancing programs include FHA Streamline Refinance and FHA Short Refinance.
FHA Streamline Refinance
Streamlined refinancing refers to the process established by FHA in which a borrower can refinance an existing FHA loan with limited credit documentation and underwriting. Typically you will not need a new appraisal, credit report or income verification to take advantage of this process. The basic requirements of streamlined refinancing are as follows:
- The existing mortgage must be FHA insured
- The existing mortgage must be current
- The refinancing process must result in net tangible benefits to the borrower
- Cash in excess of $500 cannot be taken out on the mortgage
FHA Short Refinance
FHA Short Refinance allows borrowers with negative equity positions to refinance their loan. Negative equity positions can occur when home values in the local market decline after you purchased your home. This program is only applicable to individuals who obtained an FHA mortgage between September 7, 2010 and December 31, 2016.