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Refinancing can be difficult if you don't have enough home equity. Decreasing home values can make it difficult to refinance your mortgage, but FHA refinancing programs may help.

FHA Refinance Options Assist Borrowers Facing Lost Home Value

Declining home values and tighter lending requirements can making it tough for homeowners to refinance mortgages. If you're struggling with above-market mortgage rates and can't get approved for refinancing through conventional mortgage lenders, FHA refinance loans may help. FHA loan programs provide several refinancing options that can confer benefits for borrowers who currently have FHA loans and those wishing to refinance to an FHA mortgage:

  • Reduce mortgage rates: With mortgage rates hovering near 5%, you may save money by refinancing from a higher rate. Your actual savings depends on how long you plan to keep your home and the refinance rates available to you.
  • Eliminate adjustable rates and non-standard mortgage features: If you have an adjustable rate mortgage or a home loan with negative amortization or other non-standard amortization, refinancing to a fixed rate FHA loan can improve your situation with consistent and fully-amortized P&I payments.
  • Cash-out refinancing: This option provides funds for home improvements and debt consolidation. If you have sufficient equity in your home, you may be able to refinance for additional amounts needed for debt consolidation or home improvements. Cash out refinancing depends on how much home equity you have and meeting FHA guidelines for cash-out refinancing.
  • Refinance your current FHA loan to a new FHA loan with better terms and less paperwork: The FHA streamline refinance program can help you gain the advantage of lower mortgage rates with fewer qualifying requirements. This program can make refinancing simpler and faster. The streamline refinance program is available to borrowers who have existing FHA home loans.

Check with your current mortgage lender and discuss your needs with with several FHA-approved lenders. Shopping and comparing mortgage quotes can help you find an FHA mortgage refinance that works for you.

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.