Refinancing with an FHA loan can be an effective way to put your home’s equity to work for you. 

Whether you are sending a child to college, consolidating bills, taking a much needed vacation, or tackling a new home improvement project, an FHA Refinance loan can be a great way to tap the equity in your home to cover these expenses.  However, you need to keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.

FHA has several different types of loans available to consumers who are looking to access the equity in their homes: 

FHA Refinancing is really a broad term used for any type of refinancing done using an FHA loan product.  Whether you are trying to refinance a high adjustable rate mortgage to a fixed rate, trying to lower monthly payments or to get cash out of your home, FHA offers many refinancing products to help you get the loan you need.  Here are some of the benefits of using FHA to refinance your mortgage:

• New higher FHA loan limits give homeowners with more expensive homes a chance to refinance with an FHA guaranteed loan.  In a tightening credit market, FHA loan guarantees can mean the difference in getting a loan or not getting a loan for many borrowers.
• Cash Out Refinancing available up to 95% of the value of your home.
• You may qualify even if you have a lower credit score or lower income.
• Interest rates are Low - lenders have less risk because FHA guarantees your loan

This FHA refinancing option is available to all homeowners who have paid down their principle balance or who have realized significant appreciation in the value of their property, creating equity.  A Cash Out refinance is pretty much just what it sounds like, it is a loan that allows homeowner to refinance their existing mortgage and tap into the equity they have built up in their home to access cash.   There are no restrictions as to what the money may be used for.  After all, it’s your money.

With recent changes to the FHA lending guidelines, you can now borrow up to 95% of the value of your home when refinancing.  So, for example, let’s assume that you have a home that is valued at $200,000.  You may refinance and borrow up to a total of $190,000.  If your mortgage balance is $150,000, that means you could access up to $40,000 in equity (minus allowable closing costs which vary from State to State.)

This refinancing option is called streamlined because it allows you to refinance your current home loan quickly and easily with less paperwork an often without having to obtain a new appraisal.  Lenders like FHA Streamlined Refinance loans because it also cuts down on the amount of paperwork they have to complete.  This saves them time and saves you money. 

Some of the benefits of this type of loan: 

• No Appraisal
• No Credit Restrictions
• No Minimum Income Requirements
• No Income Verification
• No Face-to-Face Applications
• No Heavy Documentation Requirements
  

This type of FHA Refinance is designed to help existing FHA loan customers reduce their interest without headaches and hassles.  The only qualifications for a Streamlined Refinance are; a) your original home loan must be an FHA loan in good standing, b) the refinance must lower your monthly interest payments. This type of mortgage refinance reduces your monthly expenses by lowering your interest payments but there is no option to receive cash back. This type of loan is particularly good for people who are in good financial standing with no significant debt issues.  This type of loan will give you the opportunity to lower your monthly payments and interest without a lot of added hassles or unnecessary expenses.