A Federal Housing Administration (FHA) loan is a type of mortgage insured by the Federal Housing Administration. But unlike other kinds of loans, they can only be issued by an FHA-approved lending company.
Several advantages come with FHA refinancing. And for some individuals looking for refinancing options, it can provide a great deal of help as it can alleviate the burdens of conventional loan types. Nonetheless, it’s essential to learn more about FHA refinancing before diving into it headfirst. With all that said, here is a brief guide that will help you understand how it works.
FHA Refinance Options
Homeowners with an FHA loan can either refinance a conventional loan or a new FHA loan as long as they meet all the mandatory requirements. Strictly speaking, you need a good credit score and history, as previous negative remarks can decrease your chances of qualifying for refinancing. Additionally, there is a waiting period depending on what type of option you choose. To better grasp the topic, below is a preview of the different FHA refinancing options available.
1. Conventional Refinance Loan. Conventional refinance loans come from private lenders that have no backing from any government agency. You can get rid of mortgage insurance if you qualify as long as you have at least 20 percent of the equity in the home with this option.
2. Streamline Refinance. FHA streamline refinancing can speed up the process since it does not require the tedious paperwork usually involved in other refinancing options. Since there are fewer steps and less documentation, you can get approved in a short amount of time. Furthermore, it has lower interest rates and monthly payments, making settling off debts a lot easier.
3. Cash-Out Refinance. FHA cash-out refinancing is pretty helpful when you need money to pay for loans and other expenses. As it allows homeowners to take out a bigger loan than the current one, you’ll have more breathing room to address your financial problems.
4. Simple Refinance. FHA simple refinance allows individuals to pay off their current FHA loan with a new one. Sometimes, it can have adjustable interest rates, but it doesn’t enable cash-outs. Thus, you’re simply settling your previous loan with a new one, but this does give you room for adjustments and negotiations.
5. Rehabilitation Refinance Loan. Rehabilitation refinancing loans, also known as FHA 203(k) refinancing, are a type of mortgage that the government insures. It permits homeowners to take out a loan for either home purchases or home renovations. It allows you to borrow a bigger loan that can cover your previous loan and fund home projects.
Home Buying in Los Angeles
Currently, there are many types of FHA refinancing options available for homeowners. Still, you must understand how each one works to choose the suitable option that can help your current financial situation. Furthermore, it is vital that you keep your credit score and payment history spotless to make it easy for you to qualify for these types of mortgages.
Do you need assistance in understanding home loans in Los Angeles? Shannon Christenot is a reliable financial provider with an assemblage of the best mortgage lenders in Los Angeles. If you need help deciding which refinancing option is perfect for you, call us at (818) 601-2231 for a consultation today!