Refinancing Home Mortgages Using an FHA Loan

Interest rates on mortgages are currently low, and homeowners will apply for refinancing in order to obtain a lower rate on their mortgage. There are many lenders and different programs to choose from, and most can be found online. Not only are interest rates considered low, there are programs to help homeowners even obtain a lower interest rate on a mortgage. For example, refinancing home mortgages using an FHA loan is a strategy that homeowners use to receive a lower rate on their mortgage. FHA loans are loans designed for those who are considered having a lower income.

Homeowners refinance their mortgages with FHA loans because homeowners are attempting to build equity in their home. A lower interest rate on a home loan will reduce the homeowner’s monthly payment. Furthermore, a lower interest rate also provides the homeowner the opportunity to build equity in their home faster than if they paid a higher interest rate. Only homes that are the primary residence of the borrower will be eligible for refinancing through an FHA loan. In other words, homeowners who are attempting to refinance a home that isn’t their primary residence will not be qualified for an FHA loan.

However, if a homeowner proves they live in the home at least once a month, they may be able to bypass the regulation that calls for the home to be the primary residence of the borrower. FHA loans provide two ways of using the FHA program to refinance a home mortgage. The first option is the FHA cash out refinance loan and the second option is the FHA streamline refinance loan. FHA cash out refinance loans are basically for homeowner’s whose property has gained significant value since the homeowner has purchased the home. This refinancing option made available will allow homeowners to obtain another mortgage that is more than their current mortgage.

The second option is basically designed to reduce the interest rate with a new FHA loan. Homeowners will benefit from FHA streamline finance loans because often times the lender does not require the home to be appraised. This option also cuts down on a lot of red tape that is usually associated with refinancing a mortgage loan. Both options that FHA loans provide will have rules and regulations that homeowners should be fully aware of before applying for refinancing. FHA requires the borrower to be living in their homeowner a certain amount of time before qualifying for refinancing.

FHA may also require the homeowner to make a certain amount of monthly mortgage payments before they are allowed to refinance their mortgage with an FHA loan. These restrictions are new, and refinancing a mortgage with an FHA loan never before required the homeowner to make a certain amount of payments before they can refinance the home loan. FHA requires homeowners to make at least six monthly mortgage payments before they qualify for a FHA refinancing loan. Another stipulation requires 210 days to pass since the initial home loan has gone through closing procedures.

Homeowners will experience benefits with FHA loans because FHA loans often have lower fees and closing costs than traditional mortgage loans. However, FHA loans do not limit interest rates, and the homeowner should consider the current interest rates before refinancing their home. The current interest rates are at a low, and economists say the housing market is currently in a buyer’s market. Many homeowners across the nation are refinancing their mortgage loans with FHA loans and other type of mortgage loans to receive a lower rate on their mortgage. Low interest rates on mortgages will help homeowners lower their monthly payments while building equity at the same time.