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There has been quite a bit of news as of late regarding FHA Refinancing, particularly since President Bush announced the new FHASecure Initiative. FHA Refinancing is a great way to pay off a current adjustable rate mortgage or to take cash-out up to a 95% Loan-to-Value on a property. We will be taking a look at the various niches FHA refinancing offers and how an FHA loan could put one in a much better financial position.
One benefit of FHA Refinancing is that FHA loans are not credit score driven like most conventional loans. A strong 12 month mortgage credit history is required, however, there is not a minimum credit score which must be exceeded to qualify for a loan. Compensating factors such as paying off an Adjustable Rate Mortgage (ARM) or lowering your monthly debt load are weighed heavily as well.
FHA Refinancing also makes considerable allowances for owner-occupied 2-4 unit properties. 1-2 unit properties allow for a cash-out refinance of up to 95% of the properties appraised value, and 3-4 unit properties can cash-out of to 85% of their appraised value. Cash-out refers to any proceeds used to pay of consumer debt, non-purchase money 2nd liens, or cash in hand.
FHA refinancing is a great option if you own a property with a manufactured home as well. The manufactured home needs to be on a permanent foundation and meet HUD's guidleines to qualify. Ask your mortgage professional for the guidelines for FHA loans on manufactured housing.
FHA refinancing can be done on a property with deferred maintenance or in the middle of getting work done through an FHA 203k or FHA Streamline K refinance. Most conventional loans will not loan on a property that is "subject to" repairs being completed.
FHA refinancing can be done to pay off high rate owner financing or bank balloon notes on manufactured homes provided the home and the foundation meet HUD guidelines.
FHA insured mortgages are offered with full income and assets documentation. There are no "stated income" or "no doc" FHA loans. Homeowners must provide W2's and tax returns with sufficient income to prove affordability.
Contrary to popular belief, you can still qualify for an FHA loan with previous mortgage lates. With a viable explanation for your past late payments such as an accident or an illness, you can be approved today. Of course the loan to value that you qualify for will be reduced some, it's a small price to pay. But if you have an adjustable rate mortgage or you need to consolidate debt or you simply just need to save money by reducing your rate, FHA is the way to go.
FHA streamline loans are only available to current FHA-insured homeowners who wish to reduce their monthly payments, however FHA refinance loans are also available to borrowers who have conventional or even subprime mortgages.
An FHA streamline refinance may not require an appraisal. If you need to refinance your FHA loan and your property value has decreased this may be a good option.
Qualifying for an FHA streamline refinance is easy if you can show a good mortgage history for the last twelve months. The lender will not require verification of employment, income, assets or credit. Your previous mortgage history is the documentation used to qualify you for the new, lower payment.
» DISCLAIMER: The information contained in this article on 'FHA Refinancing' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.
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