Saving Money by Using the FHA Refinance Program

If you’re interested in saving some money on your home loan, you’re not alone.  In today’s economy, everyone is looking for a cheaper payment and often, a slight reduction can make the difference between being able to meet your obligations and not being able to make the payment on your loan.

If you have an FHA mortgage on your home, you’re already saving a ton of money.  The FHA program, managed by the Federal Housing Administration, is targeted at buyers who would usually not qualify for a mortgage (or would only qualify for a loan with a high interest rate) and provides qualified borrowers with loans at highly competitive rates and low down payment options.  There are a variety of loan options including adjustable rate and fixed rate mortgages, and buyers are able to roll closing costs into the loan rather than pay them up front which can save up to $6,000.

If, however, you’re interested in potentially getting a reduction in your FHA loan payments, you can choose from cash out refinancing or streamlined refinancing.  Cash out refinancing permits homeowners to change their loan terms, possibly reduce their interest rate (depending on the current interest rate on your loan and the present market’s interest rate) and get cash out of their home all at the same time.  Borrowers basically get a second mortgage for more money than the first, repay the first mortgage, and use the remaining cash in any way they see fit, including home repairs, credit card or other debt repayments, car purchases, college expenses, etc.  In order to qualify for a cash out refinance, borrowers need to have enough equity (that is, their loan value needs to be lower than the market value of their home) to receive the desired amount of cash.

The second FHA refinancing option is a streamlined refinance.  As its name implies, the streamlined refinance permits buyers to refinance their home loans with a minimal amount of time and paperwork, which can be particularly helpful if you are having financial difficulties and need to lower your payment immediately.  The streamlined option often eliminates the need for an appraisal, which can save you around $300-$400 at least, and the paperwork is greatly reduced which might mean that the lender completing the paperwork will not charge as much for the process as he or she would otherwise.  In order to qualify for a streamlined refinance, your FHA loan must be in good standing and the finance must result in lower interest payments.  There is no cash back option for FHA streamlined refinancing.

To find out more about the FHA program or learn how to refinance your loan, please visit www.fha.gov

May.17,10 8:22 AM




This content can not be copied or re-distributed with out permission from Cooper Realty Associates or iWebbIt® Delaware Companies.