Home Mortgage Refinancing Guide

Are you thinking about mortgage refinancing with an FHA loan? You’ve probably heard that mortgage rates are at a five year low and that the FHA refinance loans have been updated and are once again very popular. Fortunately for you, FHA loans now present an excellent opportunity for you to refinance and save some money in the process…and it is no more difficult to get an FHA loan than a traditional mortgage loan.

Qualifying For FHA Mortgage Loans

Before you jump into FHA refinancing it is important to know the basic requirements for FHA mortgage loans. In order to qualify for FHA refinance loans your monthly mortgage costs including principle, interest, taxes and insurance must be less than 31% of your gross monthly income. You also need to have enough money coming in to pay your mortgage and any other debts on a monthly basis. Your total debt-to-income ratio must be less than 43% of your monthly income unless there are other compensating factors to make up the difference.

FHA Mortgage Credit Requirements

Your credit history is another factor in qualifying for an FHA refinance loan. Qualifying is not entirely based on your credit history; however, having a FICO score greater than 580 will help your cause. The FHA guidelines help borrowers with credit challenges…if you’ve had problems in the past and can show you’ve recovered in a reasonable fashion your credit will not necessarily prevent you from refinancing with an FHA mortgage loan.

What About Bankruptcy?

If you’ve had a bankruptcy recently, you may still be able to refinance with an FHA mortgage. If your Chapter Seven bankruptcy has been discharged for at least two years you can qualify for FHA mortgage refinancing. If you are in Chapter Thirteen and are making all of your payments on time for at least one year you will also be eligible for FHA mortgage loans.

If you have equity in your home it could be possible to refinance up to 98% of your home’s appraised value, even with your closing costs. If you are considering taking cash back it is possible to refinance up to 95% of your home’s value…depending on your circumstances. If you lack equity in your home it is possible to find a lender willing to write down or write off the excess owed to refinance the loan. You can learn more about refinancing your mortgage with paying too much by registering for the free mortgage video guide found on this website.

FHA mortgages are a type of government backed home loan. While FHA mortgage loans have been around for some time, the program was recently expanded to include FHASecure loan offerings to assist homeowners with adjustable rate mortgages that they can no longer afford. Here is the basic definition of FHA Mortgage Loans.

Before the credit meltdown FHA mortgages were become less popular and members of congress were even discussing scrapping the program due to low interest rates and the ease of qualifying for traditional mortgage loans. Now with all of the trouble in the mortgage industry FHA mortgages are back in vogue for borrowers with marginal credit and low income. The downside of an FHA home loan is that they require a three percent down payment and you will be required to purchase Private Mortgage Insurance, which will raise your monthly payment.

Just because you qualify for an FHA backed mortgage loan don’t think you’re protected from shady lenders and mortgage brokers. In fact, the Private Mortgage Insurance included with your FHA mortgage loan only protects the lender from losses if you default on the loan. There is no protection for you from junk fees and commission based markup of your mortgage rate! The only way to protect yourself from paying too much with your FHA mortgage loan is to do your homework and find the right person to originate your loan.

You can learn more about finding the right mortgage broker to arrange your FHA home loan without paying junk fees and the hidden markup known as Yield Spread Premium by registering for the free mortgage videos found on this website. Register today, the videos are yours free with no obligation.

You may have found this site searching for information on current FHA rates. Finding out about government programs to refinance your home can be confusing, especially if you don’t know where to start. FHA programs are government insured loans; there are no set FHA mortgage rates…finding an accurate source for rate information becomes more difficult because mortgage rates are almost never what they seem. Here are several tips to help you refinance your home loan without being taken advantage of by the lender.

FHA Mortgage Rates

If you qualify for an FHA loan to refinance your mortgage the rate you qualify for is set by the lender behind your loan. Because FHA loans are backed by the government you’ll be required to purchase Private Mortgage Insurance to protect the lender and government from loss if you default on the loan. What you might not know is that the mortgage rate you’re approved includes markup by the person arranging your loan for a commission. This commission is called Yield Spread Premium and could raise your monthly payment by several hundred dollars unless you know how to avoid it.

Yield Spread Premium & FHA Mortgage Rates

To get an FHA mortgage you’ll need to find someone to arrange the loan for you. This person could be a mortgage company or broker and with the exception of FHA streamline refinancing you’ll be required to pay closing costs and other fees for the loan. What you shouldn’t get stuck paying are the hidden costs created by Yield Spread Premium. FHA loans are no different from conventional loans in the way that they arranged…understanding how the person arranging your loan is paid will help you avoid paying too much when refinancing.

Yield Spread Premium is the commission the person arranging your loan receives for marking up your mortgage rate. When your FHA loan was approved the lender approved you for a certain mortgage rate. The broker marks this rate up because the lender pays them a bonus of 1% of your loan amount for every .25% they markup your rate. This markup is paid in addition to any fees you’re already paying for loan origination.

It is possible to refinance your home with an FHA backed mortgage without paying for Yield Spread Premium. There are brokers willing to work for a 1% origination fee without marking up your rate. You can learn more about finding the right mortgage broker without paying junk fees or unnecessary markup by registering for my free video tutorial. Register today; the videos are yours with no obligation.