About FHA Loans

FHA Loans

What are the advantages of FHA Loans versus other Loans?
There are lots of good reasons to apply for an FHA Loan, especially if one or more of the following apply to you:

You don't have perfect credit

You don't have a lot of money to spend on a down payment

You're worried about your adjustable rate monthly payments increasing

You're a first-time home buyer

You want a low interest fixed-rate loan

If any of these things describe you, then an FHA Loan may be your best mortgage option. Why? FHA-insured loans offer many benefits and protections that you won't find in other loans including:

FHA Loans are Credit Flexible
FHA Loan Credit guidelines are not completely score driven. They are written in a way that provides the borrower the benefit of the doubt that there had been circumstances beyond their control in their past. Provided the borrower has recovered from those circumstances in a reasonable manner, they're generally going to be credit-eligible for an FHA loan. A 640 FICO credit score is required to obtain an FHA Loan Approval.

FHA Loans Carry Great Rates, Low Monthly Mortgage Insurance
Another advantage of FHA loans, as compared to a conventional loans, is great interest rates and low mortgage insurance (MI). FHA interest rates are usually better than a conventional 30-Year Loan.

FHA Loans Have Smaller Down Payments
FHA Loans Qualifications only require a 3.5% down payment and the money can be a gift from a family member, employer or charitable organization, which other programs don't allow.

FHA Loans Offer More Protection to Keep Your Home
The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, the FHA loans have many options to help you keep you in your home and avoid foreclosure.

What Kinds of FHA Loans are Available Today?

Purchase FHA Loans - FHA Loans can be used to purchase a home in all 50 states. Purchase FHA Loans are available with very low fixed FHA Loan Interest Rates. The Maximum FHA Loan Amount varies from area to area. The lowest maximum FHA Loan Amount for any area is $271,050.

Refinance FHA Loans - FHA Loans can be used to refinance home loans for various purposes including interest rate reduction, payment reduction, debt consolidation, cash out, and home improvement. FHA Loan Refinance can be used to access up to 97.75% of your homes current appraised value.

Fixed rate loans - Most FHA Loan Terms offered are in fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same during the whole loan period, normally 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your monthly payment will be, and you can plan for it.

Adjustable rate loans - Most first-time home buyers are a little stretched financially, so they want payments as low as possible at the beginning. With FHA's adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. FHA uses the 1-Year Constant Maturity Treasury Index (1 Yr CMT the most widely used index, to calculate the changes in interest rates. An index is a measure of interest rate changes that determine how much the interest rate on an ARM will change over time.

As you can see, there are many options that are available when considering an FHA Loan Online.

Additional lender offers.

FHA Refinance Loan Programs

Rate/Term Refinance (No Cash Out)
The FHA Rate/Term Refinance is for borrowers who currently have a conventional fixed rate or ARM mortgage and wish to refinance into an FHA Mortgage. This program helps borrowers who wish to have a stable, FHA insured fixed rate mortgage.

FHA Cash-Out Refinance
A FHA Cash Out Refinance Loan is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.

FHA Streamline Refinance
The FHA Streamline Refinance is designed to lower the interest rate on a current FHA mortgage or convert a current FHA adjustable rate mortgage into a fixed rate. An Streamline FHA Refinance Loan can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no credit check, no appraisal, no qualifying debt ratios and no income verification.

FHA Refinance Loan FAQ's

Are there any out of pocket expenses for an FHA Refinance Loan?
Generally, there are no out-of-pocket expenses incurred with an FHA Home Refinance, other than the appraisal fee. FHA Refinance Guidelines allow all other closing costs, including lender fees, to be included in the new loan amount, provided that the home will appraise for that amount.

Can I take cash out of my home with an FHA Refinance?
Yes, with an FHA Cash Out Refinance, the home owner obtains a new FHA Mortgage Refinance for more than the amount owed on their current mortgage; meaning the homeowner pays off the current mortgage and then has additional cash to use however they want. They maximum loan amount for an FHA Cash Out Refinance is 85% of the homes current appraised value.

What are the guidelines for an FHA Refinance Loan?
If the borrower wishes to take cash out of the property, then the maximum FHA Home Loan Refinance amount is 85% of the current appraised value. If the borrower does not take cash out then the maximum financing will be 97.75% of the appraised value of the home or the amount you are refinancing plus closing costs, whichever is lower.

Why should I consider refinancing into a FHA-insured mortgage?
FHA Refinance Loans do not come with prepayment penalties, have no teaser rates nor balloon payments. They are offered at market rate with terms up to 30 years and are fully amortized, meaning that you pay towards principal and interest every month.

What if I have a prepayment penalty and other refinancing costs and there isn’t enough equity in my home to refinance?
If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new FHA Mortgage Loan Refinance, then you should ask your lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. Offering either of these options is at the discretion of the lender.

Does it matter that the value of my home is now less than what I still owe?
The mortgage lender considering the refinance will have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home’s value.