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FHA home loan programs offer homeowners facing challenges of lost home value and credit problems a chance to refinance their home loans.

Lost Home Value? FHA Refinance May Provide Solution

Mortgage rates remain relatively low, and you want to refinance your mortgage, but you can't qualify for conventional refinancing because your home has lost value. FHA doesn't require a down payment for refinancing, and depending on the amount of home equity you have, it may also be possible to roll some or all of your closing costs into your new loan. Another option is accepting a slightly higher mortgage rate in exchange for your mortgage lender paying closing costs. These are two examples of how FHA can help homeowners with refinancing.

FHA Refinancing: Flexibility Assists with Financial, Credit Challenges

The lingering effects of depressed economic conditions have caused many to suffer lapses in employment and problems with credit. Refinancing your mortgage under conventional lending requirements can be difficult if you have less than solid credit and have gaps in employment. Although FHA guidelines emphasize steady employment, with preference for those keeping the same job over the past two years and a history of increasing income, FHA's primary concern is verifying that borrowers have the means to make mortgage payments.

Evaluating Mortgage Quotes: Pay Attention to APR

The annual percentage rate is the total of all costs of a mortgage loan including interest, lender fees, and closing costs, expressed as an interest rate. If you're comparing two mortgages of the same amount and mortgage rate, any differences in the APR are caused by variations in closing costs. This is why it's important to review mortgage quotes carefully, and to ask questions and negotiate when feasible. For help with questions about refinancing your mortgage or shopping for home loans, please contact a HUD approved housing counselor for assistance and details about FHA mortgage refinance options.

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.