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You're trying to refinance, but your credit is dicey and you don't have much home equity. Don't give up; you don't want to miss out on current low mortgage rates. FHA mortgage refinancing may be the answer.

FHA Mortgage Refinance Provides Option for Cash Strapped Homeowners

Economic and personal financial challenges have placed many homeowner squarely between a rock and a hard place; mortgage refinancing is denied due to lack of home equity and or other issues including less than stellar credit or a past employment problem. If you're experiencing any or all of these circumstances, FHA refinancing may provide you with an affordable refinance option at today's low mortgage rates. Your current mortgage doesn't have to be an FHA loan to be eligible. Here's why you should consider FHA mortgage refinancing:

  • Low home equity requirement: If your home has declined in value and you now have little equity, an FHA mortgage loan may provide mortgage refinancing terms you can afford. FHA requires minimum equity of 3.5%, and you can roll its upfront mortgage insurance premium (UFMIP) into your loan.
  • Lenient credit terms: FHA has traditionally provided access to home ownership to moderate income families and it has more lenient credit requirements than those of conventional mortgage lenders. FHA loan requirements don't include perfect credit, but you must not have had a foreclosure within three years and any bankruptcy must have been discharged at least two years prior to applying for FHA refinancing.
  • Streamline refinance available for homeowners who currently have FHA mortgage loans: The FHA streamline refinance program can help current FHA borrowers refinance into a new FHA mortgage loan at a lower mortgage rate. Check out details on streamline refinancing here.
  • FHA supports lenders and homeowners in preventing foreclosure: FHA has pro-active foreclosure avoidance programs that can assist you should you find you cannot make your mortgage payments.

In today' climate of tightened credit and higher down payment requirements, an FHA mortgage can provide access to a lower mortgage rate while eliminating exotic mortgage terms that can make it difficult to pay off your home loan. Check with your current mortgage lender for FHA refinancing information, or find an FHA approved lender in your area.


Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.