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.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
