08/23/2010 The value of a mortgage refinance is undisputed. Refinancing homeowners to access home equity, reduce monthly payments, and obtain better interest rates in order to save money over the long haul. Homeowners considering an FHA refinance have three refinance options to choose from.
FHA Streamline Refinance
The most familiar type of FHA mortgage refinance is the Streamline refinance. This type of refinance isn't used to obtain cash from equity. Rather, a Streamline refinance is used to swiftly reduce mortgage rates and monthly payment amounts. Streamline refinances are called such because they typically don't require appraisals or other home inspections and very little paperwork is involved. This speeds up the closing process and allows the homeowner to take advantage of the lowest mortgage rates almost immediately.
FHA Cash Out Refinance
If you want to transfer some of your home equity into cash, an FHA Streamline refinance isn't what you want. The FHA does offer a cash out refinance option, however. Homeowners whose homes have increased in value since the time that they were purchased. An FHA cash out refinance provides a homeowner with a new FHA mortgage loan at a higher amount than his or her previous loan. The new loan is used to pay off the old one in full, and the excess is converted into cash for the homeowner to use. This cash may be spent on any number of things, including medical bills, college tuition, and home repairs.
Non-FHA to FHA Mortgage Refinance
If your current mortgage is not an FHA mortgage but you want to take advantage of FHA refinance rates, you're in luck. The FHA allows you to refinance non-FHA mortgages under FHA terms. This is different than a typical FHA mortgage refinance, however. Homeowners who don't currently have an FHA mortgage cannot use the FHA Streamline refinance option, but other arrangements are available, and an FHA refinance is still typically faster and simpler than any other type of refinance. Also, the FHA will allow you to refinance even if your credit score is not the best.
Of these three FHA mortgage refinance options, one of them will surely fit your needs. Learn more about your FHA mortgage loan options here.
