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You want to refinance, but have little equity, bad credit, or a dicey employment history. FHA insured mortgage loans offer flexible qualifying requirements, and you can refinance up to 96.5% of your home's current value.

Refinance Problems? Try an FHA Loan

Hard times can create obstacles for refinancing your mortgage. If your home has lost value, or you've had credit problems, it can be difficult to impossible to qualify for a conventional refinance loan. FHA insures home loans offered at competitive mortgage rates. Why refinance with FHA?

FHA Loans: Get an Affordable Mortgage with a Fixed Rate

Some recent problems with home loans were created by mortgage loans designed to be affordable at an initial low rate, but when loan terms adjusted, mortgage rates and monthly payments rose beyond the ability of borrowers to afford them. This was caused by mortgage terms that added unpaid interest on to the loan balance, or permitted unlimited adjustments to mortgage rates. If you have an adjustable rate mortgage and want to refinance to a fixed rate, getting an FHA mortgage can be a good choice. Here is some information about refinancing a non-FHA mortgage to an FHA mortgage:

  • Shop for FHA-approved mortgage lenders online: Get several quotes from FHA-approved lenders.
  • Second chance: If you've had a foreclosure or bankruptcy, it may be possible to qualify for an FHA refinance mortgage. Foreclosures must have occurred at least three years ago, and bankruptcies two years ago. FHA typically offers more lenient credit qualifying than conventional lenders.
  • Owner occupancy requirement: Property securing your FHA refinance mortgage must be owner occupied: At least one borrower of record must occupy the subject property as his or her primary residence.
  • See a HUD-approved housing counselor: HUD approved housing counselors can help you verify eligibility for an FHA loan and design a plan of action for qualifying if needed.
  • Establish at least one full year of on-time payments for your mortgage and other obligations: If you've had problems making payments during the past year, it may be worthwhile to put off refinancing until you can show one full year of on-time payments for all of your financial obligations.

Contact a housing counselor more more information on refinancing to an FHA mortgage today.

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.