How Can I Get an FHA Refinanced Loan?
The Federal Housing Administration (FHA) provides mortgages to purchase a home or refinance a home. FHA does not lend directly to the public in most instances. FHA insures mortgage loans against losses when they conform to FHA's underwriting guidelines, and FHA receives its required mortgage insurance premiums. Mortgage lenders and banks request approval from FHA. Once approved, they then may offer FHA's loan programs.
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Refinance Programs
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Decide what type of FHA refinance loan you prefer. FHA offers standard refinance loans, which allow homeowners to change the loan type, term and interest rate of their existing mortgage. FHA also offers cash-out refinances, which allow homeowners to access some of the equity in their home. If you currently have an FHA Mortgage and you qualify, you may apply for a streamline refinance mortgage. Streamline refinance mortgages allow existing FHA borrowers to lower their interest rate or change their mortgage into a more conservative mortgage type while not requiring an appraisal or income qualification. FHA offers reverse mortgages to homeowners age 62 and older, which required no payments for life. FHA also offers rehabilitation loans, which provide funds to rehabilitate or repair an existing home.
Approved Lenders
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FHA maintains a list of approved lenders throughout the United States. FHA recommends homeowners speak two multiple lenders prior to applying for an FHA loan. FHA's lender list provides detailed name, address and phone numbers for lenders in different cities and states throughout the country.
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Credit Qualifying
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While FHA does not require perfect credit, FHA does require reasonably good credit. Minor derogatory items such as medical collections and late payments may be acceptable. Recent significant derogatory credit issues, however, usually disqualify the homeowner from an FHA loan. Significant derogatory credit includes tax liens, judgments, a recent bankruptcy (within two-years, if chapter 7) or recent foreclosures.
Employment and Income
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FHA requires homeowners to prove their ability to repay the mortgage when obtaining an FHA refinance. The only loan programs that do not require this are the streamline refinance mortgage and reverse mortgage. Ideally, the homeowner proved their ability to repay the streamline refinance mortgage when they received their initial FHA loan. Reverse mortgages do not require any payments, so no income is required. Since the new streamlined refinance must provide a lower payments or interest rate, FHA presumes the person can make a lower payment if they've been making the higher payment. FHA requires homeowners to prove they receive stable and consistant income, either through employment, self-employment or other non-employment sources of income.
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