Top (Three|3} Things to Know About FHA Refinance Loans

Refinance loans allow homeowners to enjoy the benefits of investing in their property year after year. Also, refinance loans can actually help in the FHA loan process and get you a better deal! However, like all major investments careful steps must be taken before the process begins, so here are the top 3 things you need to know about FHA refinance loans.

Cash Out Refinance

The Cash Out refinance option is particularly useful to homebuyers whose property has increased in market value since the home was purchased. A Cash Out refinance allows homeownersto refinance their existing mortgage by taking out another mortgage for more than they currently owe, which means that they are repaying their current mortgage and using the equity they have built up in their home to take out another larger mortgage. This allows the homeownersto use the equity they have built up in their home and put it use.

Streamlined refinance

Another refinance option is streamlined refinance. This refinancing option is known as streamlined because it allows you to reduce the interest rate on your current home loan quickly and easily, usually without an appraisal. FHA Streamlined refinance also means there is reduced amount of paperwork to accomplish for your lender , and that means less of your resources are used. In order to be eligible for a Streamlined Refinance your original home loan must be a FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option will reduce your monthly expenses by lowering your payments but there is no option to receive cash back.

FHA Refinance - Non FHA Loans

Finally, FHA Refinance loans can be used to refinance any non FHA loan to an FHA loan. If you have a conventional mortgage, you may be able to use the FHA refinance loan to refinance up to a LTV (Loan to Value) of 97.75% provided that they are not getting any money at closing or paying off anything other than existing mortgage(s). Also, for those unfamiliar with the term, a Loan-to-Value ratio expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. This allows for a substantial loan if the borrower meets all the requirements.

FHA Refinance loans let homeownersfeel a sense of satisfaction for all they have invested into their property. These loans often give the homeowners the ability to send their child to college, take a much needed vacation, or even plan to invest in a larger house if necessary.