You can refinance your FHA home loan and get a lower mortgage rate if you meet certain requirements and by following a few steps.
What is required to refinance your FHA loan?
• Mortgage payments must be current and up-to-date.
• The refinancing should result in lowering your mortgage payment.
Steps for refinancing:
1. Decide how you will refinance your FHA loan – Will you refinance with another FHA loan or refinance going conventional? There are a few differences between the two loan types. With an FHA loan, you don’t need spotless credit – your credit score can be lower; however, you will not be able to take cash out against your home with an FHA loan. Refinancing to a conventional loan does allow for you to take cash out.
2. Shop for your interest rate – Do your homework and start shopping for the best interest rates. Talk to several, or as many banks and institutions as you need to find the rate you are looking for and are happy with. Utilize online interest rate comparison tools to shop and compare for easy searching.
3. Speak to a qualified mortgage loan specialist – Once you’ve found a bank that can give you the best rate, speak to their mortgage specialist. A mortgage specialist can help you with everything to do with your loan refinance; from deciding which product and programs are best for you and your needs, and putting together your refinance package. They will also arrange for home appraisals and credit checks.
4. Loan application – Fill out a loan application with your lender. When refinancing from one FHA loan to another FHA, request a streamlined FHA loan for the benefits. One is less paperwork which means a quick turnaround of loan funds.
Conventional loans require:
• Recent pay stubs
• Bank statements
• Related financial documents
5. Closing costs – Ask for a list of your closing costs. If using your current mortgage lender, you may be given a break on certain fees. You can also negotiate closing costs; such as, application and attorney fees.
6. Close the deal – At closing, carefully review the total loan amount, interest rate, and monthly payments before signing.