FHA Loans

Federal Housing Administration (FHA) loans provide easier qualification requirements for those folks with lower credit scores. They also offer the highest amount for both rate and term and cash-out refinancing, and FHA loans remain an excellent option for those looking to refinance or purchase.

The FHA offers three types of refinancing mortgage loans: a streamline refinance, which is the easiest to qualify for; a cash-out refinance, which allows you to cash-out the equity in your home when you have an existing FHA mortgage; and a replacement loan, in which your existing mortgage is replaced with a more affordable one.

FHA

Streamline

is a refinance program offered by the Federal Housing Administration that could get you a lower rate on your existing FHA mortgage without a lengthy and complicated income/credit qualification process. In other words, the typical refinance process is “streamlined”, and an appraisal is also not required. The FHA Streamline loan is also known as an FHA IRRRL (Interest Rate Reduction Refinance Loan).

FHA
Cash-Out

Refinance Program

is intended to pay off your old mortgage and closing costs, and yield an additional amount for your own use. This amount, which is limited to 85 percent of the appraised value in an FHA cash-out refinance, can be used for any purpose. A minimum credit score of 500 is required and your total monthly debt — consumer debt plus housing debt — may not exceed 41 percent of your gross monthly income.

FHA

Replacement Loan

requirements are similar to those for a cash-out refinance when it comes to credit score and income. This is typically a good option for homeowners who have an existing FHA mortgage loan and are looking to replace that loan for one with more affordable terms.

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