subject: The Basics Of Fha Refi [print this page] The Federal Housing Administration (FHA) was established in the 1930s to regulate interest rates and mortgage terms on loans insured by them. This was the result of the Great Depression where numerous Americans lost their homes to foreclosure and the average home owner had no refinancing options whatsoever. The regulations made it possible for many working class Americans to become home owners and over the years the FHA has financed millions of units of privately owned rental units and provided home owner status to people who had a history of financial struggles. The FHA also provides refinancing options for home owners with more lenient requirements compared to many conventional banking institutions. However, FHA does have some basic qualification requirements for a FHArefi.
Generally applicants may be required to prove that they are able to meet the monthly housing costs including other monthly expenses and debts. To do this you may be required to show proof of steady employment. Lenders providing FHArefi may require you to be employed by the same employer for at least two years by requesting for copies of your paychecks or tax returns. If you change your occupations or fields as quickly as you change your shoes, you may be considered ineligible for a refinance program under FHA.
Although the FHArefinance program is under government program, it may not necessarily mean that you might automatically qualify simply because you are an American citizen. You may still have to show that you have good credit history and maintain a minimum credit score of 620. In some cases, lenders may accept lower scores but rarely. If you find that your credit report might be less than satisfactory, you might want to show that you are at least taking some action to improve your finances and that proper arrangements have been made to rectify your particular situation. Of course your chances of qualifying for a FHA refinancing program may be increased if you are to improve your credit score even though your credit score may not affect a lenders decision to approve your application. But you may enjoy the benefit of lower interest rates and in turn, lower monthly payments.
Since FHA loans are created for owner occupied properties, you may be required to maintain residency within the home during the duration of the loan regardless of the type of home you have purchased. FHA may also require you to have built up equity in your home. The equity amount depends on the type of refinancing option that you have selected.
If you manage to fulfill all the FHAloanrequirements, you may want to find out how to apply for a FHA refinancing loan. First of all you might want to check your own credit report for any discrepancies or errors and it may be wise for you to quickly correct the errors and remove any negative items that you may not be aware of. Once you are sure that your credit report is all in order, you may proceed to call a broker or lender who specializes in FHA loans. You may have to discuss your reasons for refinancing your mortgage and if your current loan is under FHA you may apply for a refinance with no appraisal and little documentation. You may have to visit your broker or banker who may calculate your income and debt ratios from the documents and information that you have provided. They may run checks to see if you do qualify for a FHA loan and provide you with a good faith estimate of closing costs.
In general applying for a FHA loan may be easy but it should never be taken for granted as it has become a medium for working class Americans to lead a better life by owning their own homes instead of merely renting.
