FHA loans are a very popular type of home loan that are backed by the Federal Housing Administration and offer borrowers who may not typically qualify for a traditional mortgage the opportunity to become a homeowner. An FHA loan offers the opportunity to receive home financing with a reduced down payment and more lenient credit requirements. Homeowners who have financed a home with an FHA loan may also refinance their mortgage for a more favorable term or rate. If you are interested in learning more about your refinancing options in Orchard Park, New York, Nickel City Funding, Inc. is here to help. Read on to learn more about available FHA loan refinancing options.
Refinancing an FHA Loan With a Conventional Mortgage
FHA loans are considered a non-conventional loan, and are insured by the government, so a lender is guaranteed to be paid back if a borrower defaults on a loan. Conventional loans, on the other hand, are not backed by the government, and pose a greater risk to lenders, so they have stricter eligibility requirements and tend to have better rates and terms. If a borrower originally obtained a home with an FHA loan, and is able to improve their credit over time, they may be able to refinance their FHA loan with a conventional loan that has a better interest rate or term, helping them save more money.
FHA Streamline Refinance
In an FHA streamline refinance, borrowers can replace their current FHA loan with a new one that has better terms and rates. FHA streamline refinances generally require less paperwork, have more flexible income and credit requirements, and do not require a home appraisal. In order to qualify for an FHA streamline refinance, a borrower’s current mortgage must already be an FHA loan, the refinance must be beneficial to the borrower, and they must have made at least six mortgage payments and have had the mortgage for 210 days.
FHA Cash-Out Refinance
Another FHA refinance option is an FHA cash-out refinance, which lets borrowers take out a new mortgage worth more than what is currently owed on their existing one, allowing them to keep the cash difference. Borrowers who choose this refinancing can also get a better term or rate while receiving a supplemental amount of money at the same time. Because these loans pose a higher risk for lenders and are for a larger amount, they do tend to have more stringent eligibility requirements.
FHA Refinancing Assistance
If you are interested in learning more about the FHA refinancing options that are available to you in Orchard Park, New York, Nickel City Funding, Inc. can help. Contact our office today to determine the best financing option for your situation.