Benefits of a FHA Refinance

Weaker credit scores? Need a high loan-to-value? Our FHA loan could be exactly what you need. You can refinance your current loan for whatever reason using our FHA loans. Use our FHA loan to take cash out of your home's equity for home improvements,
energy-efficient improvements, renovations, and more. The question is: With many other lenders and loans available in the refinancing market that all offer the same options, why should you refinance with an FHA loan?

• It is easier to qualify for an FHA refinancing loan than it is for a traditional loan “conforming” loan from Fannie Mae and Freddie Mac lenders (we do these too!). The FHA insures our loan. Since the FHA does not directly loan you the money, it is easier to qualify because the FHA guarantees our loan, which means that they guarantee us that if you skip a mortgage payment, go into default (90 days late),
or we are forced to foreclose on the property, that we will get our money back. The FHA guarantees a percentage of the loan, which they pay directly to us as lender in the case of foreclosure. So, we have far less to lose by extending credit for a mortgage loan to a borrower who chooses an FHA loan.

• You do not have to have perfect credit to refinance with our FHA loan. The FHA requires certain standards in order to offer us loan insurance, but as lender we are still guaranteed certain money in case of foreclosure, so we are more likely to fund the loan even if your credit is not ideal.

• You can have no down payment or a very low down payment, and still get a mortgage loan. With sub-prime lending and second mortgage financing mostly gone, most traditional lenders require a larger down payment. Our FHA loans only require that you have or can get 3% of the purchase price. This small amount can be a gift to you from a relative, or from your employer or from some other approved source--including a down payment gift program such as AmeriDream. If you are refinancing, you would be able to take more cash out from your home, or refinance sooner, even if you have a small amount of equity built up in your home.

• You may get a much lower interest rate on your refinance mortgage. FHA loans can offer much better loan terms than sub-prime mortgage loans because the loans are guaranteed by the federal government, so there is almost no risk involved. Because of the guarantee, as lender we are more secure with the loan and can offer lower long-term fixed interest rates and fewer points.

• The FHA will stand by you in case of an emergency. Most programs help you get your mortgage loan, and then leave you on your own. Your mortgage may even be sold to other companies, and you would never deal with your original lender again. The FHA stays with you for the life of your loan, and they can help you if you get in trouble. If for any reason you get to the point of default or foreclosure on your home, you should contact the FHA immediately. The FHA has programs that can help you retain ownership of your home in times of crisis.

These are just some of the many benefits you would receive if you refinance your home using an FHA loan. Keep in mind that because the FHA does allow you to put such a small percentage down on your mortgage loan and take out a lot of cash when you refinance, you are required to carry mortgage insurance on your home until the equity in your property has built up to 20% or more.

• An FHA loan can allow you to include the costs of your home improvements in yourloan. The FHA 203(k) program allows you to purchase or refinance a home that needs improvements and include all repair and improvement costs in the loan.

• FHA loans can even help you to make your home more energy-efficient. The FHA recognizes that with a more energy-efficient home, the homeowner can afford to pay a higher mortgage; therefore, the FHA can also include these types of repairs in the originalb loan also.

• If you are considering refinancing your home mortgage loan, you may want to research an FHA refinancing loan. You can learn more Department of Housing and UrbanDevelopment.