According to Housingwire magazine, 2015’s FHA mortgage insurance premium cuts could still see one in three FHA home loan holders make substantial savings if they choose to refinance.
Thankfully, existing FHA home loan holders can refinance relatively quickly and easily thanks to FHA Streamline. Did you know, however, that FHA refinancing can also be beneficial for holders of conventional home loans?
Key Mortgage Points to Consider when Refinancing
It’s no secret that the main drawback of FHA home loans stems from the fact that borrowers are required to make FHA mortgage insurance payments in tandem with their regular loan repayments. What many people don’t realize, however, is that the PMI on an FHA loan can sometimes be lower than their existing private mortgage insurance. This being the case, even people who have a conventional loan can stand to benefit by switching to an FHA loan.
Types of FHA Refinancing
There are three main forms of FHA refinancing, FHA Streamline refinancing, Cash-Out FHA refinance, and FHA replacement loan refinancing. The important thing to remember is that only FHA replacement loans are available to people who don’t have an existing FHA home loan agreement in place.
FHA Cash-Out Refinance
Are you interested in taking equity out of your house in order to consolidate and pay off debts, update your property, or simply treat yourself? If so, FHA cash-out refinancing will allow you to access a portion of the equity in your home. You simply need to replace your current FHA home loan with a loan for more than the amount which you currently owe, in order to compensate for the amount of equity which you are looking to access.
FHA Streamline Refinance & FHA Mortgage Insurance Reduction
FHA Streamline refinance is by far the easiest form of FHA refinancing. This is because homeowners will not need to provide proof of earnings or have their property appraised in order to qualify. FHA streamline, however, is targeted principally at people looking to reduce their overall FHA mortgage insurance premiums. This being the case, taking equity out of your house with FHA Streamline simply isn’t an option.
How to Qualify
Whether you are looking to access equity, cut your FHA mortgage insurance, or take out an FHA replacement loan, it is imperative that you are up to date with your existing mortgage payments. At the same time, it is important to be free of outstanding tax liens and not to have applied for bankruptcy in the two years prior to applying. Thankfully, if these conditions can be satisfied, you should be able to access the equity in your home or switch to an FHA home loan relatively easily.