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FHA (Federal Housing Administration) loans are government backed loans that offer flexible qualifications and the security of a fixed rate. Whether you want to get cash out or lower your payment, an FHA refinance may help meet your mortgage needs.

• Lock in a low rate and lower your monthly mortgage payments
• Flexible income and credit qualifications
• Borrow up to 85% of the value of your home for cash out refinancing
• Refinance and get money to pay for home improvements, college tuition, or debt consolidation
• Upfront and monthly mortgage insurance premiums (UMIP, MIP) required

An FHA Loan refinance may be a good choice if you:

• Need to make the switch from an adjustable rate mortgage into a fixed rate
• Want to reduce the amount of principal and interest in your monthly mortgage payments?
• Want more flexible qualification guidelines like income, equity and credit
• If that sounds like you, then refinancing to an FHA Loan may be right for you.

WHY CHOOSE FHA

1. Low down payment, as low as 3.5%
2. The loan amount can be up $697,500
3. Gift money (money from other sources like parents) is allowed
4. A non-resident person (who will not live in the house) can be a co-signer
5. You need little upfront cash as compared to some other loans
6. Good if you have limited or non-traditional credit

One great reason to choose FHA is if you have a challenge with your FICO credit score. With a FICO of over 600 you could qualify for a 3.5% down payment loan. If your FICO score is between 580-599 then down payment requirement goes up to 5%. If your FICO score is between 500-579 then down payment requirement is only 10%. (These figures are believed accurate as of the time of writing but not guaranteed. The program can change without notice. Consult a loan professional for current requirements.)

Another advantage of a FHA loan is the ease of use of gift money. In many loans, you cannot receive gift money to help you purchase the home. Gift money is just that, it is a gift and not something you receive on a regular basis like a job. A FHA loan allows for gift money. Gift money can come for a person; for example, your parents. Gift money can also come from an event; for example, a bridal registry or bridal money dance.

FHA OPTIONS

1. 15 and 30 year fixed rate loans

2. 3/1, 5/1 hybrid Adjustable Rate Mortgages (ARM)

What is a 3/1 or 5/1 ARM? ARM stands for Adjustable Rate Mortgage. It does exactly what it sounds like it will do. Over the life of the loan the rate will adjust to reflect current market conditions. There are some safeguards; namely, in a FHA ARM the rate can only go up or down 1% maximum.

The 3/1 designation means what your introduction rate will be fixed for 3 years and then after that will adjust every year. The benefit of the ARM is that the initial interest rate is lower then fixed rate loan. At the time of the writing of this article the fixed rate interest is at 4.75% while a 3/1 initial interest rate is 3.5%. There are advantages and challenges to fixed rate and ARM; be sure to consult a professional loan arranger to understand all the ins and outs.

ELIGIBILITY

1. US Citizen, lawful permanent resident alien (non-permanent can qualify if additional criteria are met.

2. DO NOT have to be a first (1st) time home buyer

3. You may only have 1 mortgage

There may be additional qualification based on your unique situation. As always, I recommend that you speak to a loan professional to examine your case and advise you properly.

VA Loan

Backed by the U.S. Department of Veterans Affairs, VA Loans allow veterans to get some of the most flexible refinance qualifications with a small upfront VA funding fee. Take advantage of the benefits exclusively for the men and women of the U.S. Armed Forces and their surviving spouses.

• No Certificate of Eligibility required for refinancing an existing VA Loan
• No mortgage insurance premium (MIP) or upfront insurance (UMIP) fee
• No housing to debt ratio or proof of a certain income amount required
• No appraisal required, in some cases
• Borrow up to 90% of the value of your home for cash out refinancing — use the money for home improvements, debt consolidation, or to pay for an unexpected expense

A VA Loan refinance may be a good choice if you:

• Are a veteran, reservist, active duty service member, or a surviving spouse of such person
• Plan to stay in your home for many years
• Need to lower your rate and/or get cash out of the equity in your home
• Want the peace of mind that stable principal and interest monthly payments bring
• If that sounds like you, then refinancing to a VA Loan may be right for you.