FHA mortgage loans has its own list of requirements and regulations that govern refinance loans. If you’re considering an application for an FHA refinance, here are a few general things you should know about going into the process.
In the FHA loan rulebook under the section, “Purpose of a Refinance Transaction” we learn, ” A refinance transaction is used to pay off an existing real estate debt with the proceeds of a new mortgage;
–for borrower(s) with legal title, and
–on the same property”.
The rules also state that an FHA borrower is “eligible to refinance the loan, as long as he/she has legal title, even if he/she was not originally on the loan.” That’s important to know in cases where a home was inherited or otherwise had ownership transferred in a way permitted under FHA loan rules.
How much can an FHA borrower refinance the loan for? According to the section titled, Maximum Percentage of Financing for a Refinance” we learn that there is no set dollar amount for FHA refinances. Instead, “The maximum percentage of financing for a refinance transaction is governed by:
–the occupancy status of the property
–the use of the loan proceeds, and
–how and when the property was purchased”.
The rule book adds that in general, an FHA refinance loan “may never exceed the statutory limit, except by the amount of any new upfront mortgage insurance premium (UFMIP). However, the maximum mortgage may exceed the statutory limit on certain specialty products.” Contact a participating FHA lender to learn which of those specialty products might be available to you–not all lenders may offer them.
Under “Types Of Refinances” we learn;
“FHA insures several different types of refinance transactions, including
–streamline refinances of existing FHA-insured mortgages made with or without appraisals
–no cash out refinances (rate and term) of conventional and FHA-insured mortgages, where all proceeds are used to pay existing liens and costs associated with the transactions
–cash out refinances.”
Read more here:: The Basic Details to Know about FHA Mortgage Refinance Loans