Refinancing A FHA Loan

Refinancing a FHA loan is a service offered to current real estate homeowners who have an existing FHA (Federal Housing Administration) contract on a house. The Federal Housing Administration is a government owned corporation. It was established under the National Housing Act of 1934 in an effort to improve housing standards and conditions. Refinancing FHA loans are directed towards minority borrowers, first time home buyers, borrowers who have troubled credit histories, and those who have little money to put down on a home. These applications can be accomplished by a process called streamline refinance for current FHA loans.

The Federal Housing Administration helped to pioneer the long-term amortizing loan, and as a result, the nation's home ownership rate has risen to an all time high of 66 percent. A qualified borrower will find that refinancing FHA loans have many advantages. The program includes no-cost interest rate reduction. When a person applies, there are generally few income or credit qualifications. Refinancing a FHA loan may include options for zero cost refinance. A borrower can easily switch the amortization from adjustable or fixed rates or do the opposite. This allows the borrower to easily shorten or lengthen the term of the existing mortgage.

Using a government sponsored program brings another great benefit. The consumer can can borrow up to ninety-seven percent of the value of his house. Refinancing a FHA loan mortgage also brings eligibility for a cash-out refinance. This means the customer can cash-out up to eight-five percent of the property value. The program also allows the homeower to consolidate first and second mortgages into one loan. Bill consolidation programs and FHA regulated closing costs make these contracts even more attractive.

Applying for refinancing FHA loans can make a huge difference in the amount a borrower pays per month for a mortgage and can lower the amount of interest that he will pay in the life of the refinancing FHA loan. A wise shopper can literally save thousands of dollars. These programs offer competitive rates for homeowers with a foreclosure older than three years, and competitive rates for borrowers with a bankruptcy older than two years. Proverbs 8:10 says, "Receive my instruction, and not silver; and knowledge rather than choice gold." God expects His children to make decisions based on thorough knowledge of the situation. Making a knowledgeable choice based on insightful information can be the best move a borrower can make when considering refinancing.

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