Per a report posted by the 2017 Home Buyer and Seller Generational Trends, it was found that 59% of home buyers used a conventional loan to finance homes. Do you know if a conventional loan is right for you in regards to a home loan? Maybe an FHA loan is better for you. In order to get an FHA loan for your mortgage you need to be able to provide a down payment starting at 3.5% with a credit score of at least 580 or higher. However, credit scores that are between 500 and 579 could qualify with a down payment of 10%.
Most people will typically refinance their home loan, especially if they are currently locked into an adjustable rate mortgage and they are facing an increasing payment due to variable interest rates. When you are ready to refinance your home loan it is important to understand all of the aspects including the benefits of FHA loan programs as well as other types of refinancing.
Is Refinancing Your Home Loan an Option?
When you refinance a home loan you are going to get a new mortgage with new terms, monthly payments and interest rates. A new loan will completely replace a current home mortgage giving you the opportunity to lower your payments and improve monthly finances. Refinancing is an option for home owners who are current on their mortgage payments, want to lower a high interest rate on an adjustable rate mortgage and have equity built up in their home.
What Are the Benefits for Refinancing a Home Mortgage?
There are quite a few benefits that make refinancing a home mortgage a wise choice. You stand the chance of making your mortgage payment more affordable with lower interest rates, or adjustments made concerning other terms of the loan. A refinance does not create any negative activity or event for your credit history either. If you are close to foreclosure, a refinance can help you stay in your home. It is important to act as soon as possible if you are having trouble making mortgage payments. The sooner you act, the better your options are for refinancing.
Is an FHA Loan Right for You?
FHA loans help people get a home loan without providing a rather large down payment. You also do not need a super-high credit score. The FHA is known to have more programs and products including a streamlined refinance program that truly help when refinancing.
Do you already have an FHA home loan? You could lower your monthly payment and interest rates using their streamline refinance program. Lower credit standards and reduced documentation make this type of refinancing a great option for FHA homeowners that want a payment reduction.
The FHA makes it quite easy to refinance with them since they don’t require pay stubs, W-2s or other types of financial documents. If you currently have an FHA loan, you are considered to be a ‘good risk’ without the need for further proof. An FHA streamline loan also offers refunds on MIP. Depending on how old your home loan is, you could be refunded a substantial amount of the original mortgage insurance payment, also called a UFMIP, an upfront mortgage insurance premium.
Other perks of a refinance through FHA are streamlined costs that are much lower since appraisals are considered to be optional. This is very appealing, especially if you are already underwater on your current home loan. You can use the purchase price as your home’s current value with no additional penalties or fees. Just know that the FHA may not require a credit report, but lenders do.
Lending experts can assist you in deciding which type of loan is perfect for refinancing your home mortgage. It is important to ‘shop around’ for lower mortgage rates and the experts know how to do just that. When a traditional bank cannot approve a loan or refinance for you, turn to the lending experts.