The Federal Housing Administration (FHA), an agency of the federal government. It is part of the U.S. Department of Housing and Urban Development (HUD). Unlike conventional lenders the FHA does not have any specific credit scoring requirements for a FHA mortgage refinance. However, FHA recommends creating and maintaining a satisfactory payment history for at least one year before applying for FHA refinancing or any other FHA loan program. The reason for this is that FHA doesn't actually make loans. Instead, it insures private loans that are issued for new and existing housing, and loans that are approved for home repairs.
FHA loans are made through banks and other lending institutions like conventional loans. These lenders have a credit scoring requirement, and it typically takes a credit score of at least 580 for a FHA loan. Lenders also look at your credit history for the past year, which is why the positive payment history of at least one year is needed before you apply for a FHA refinance.
Mortgage refinancing with FHA can lower your interest rate and payment significantly, especially if you have a subprime adjustable rate mortgage (ARM) that's about to adjust to a higher rate or a hybrid ARM (negative amortization or interest-only loan) that's getting ready to reset to being an adjustable rate fully-amortizing loan.
Like conventional lenders, FHA offers more than one mortgage refinance product. You can do a cash out refinance with FHA or refinance for better rates and terms through the FHA Streamline refinance, if you're already a FHA borrower. You can't get any more than $500 cash out, but you'll end up saving money with the lower interest rates.
With the Streamline refinance loan, you generally don't have to worry about qualifying because there typically aren't any credit underwriting requirements or a need for an appraisal or termite report. These types of FHA mortgage refinance loans can really save you a lot of money because interest rates are low.
Right now FHA mortgage rates are competitive with those of conventional mortgages, but the difference is that conventional lenders aren't lending. To get a conventional loan, you'll probably need a credit score of at least 660-680 and a loan to value (LTV) of no more than 80%. Many are expecting 75% or better. With conventional credit standards tightening even more due to the economic trouble, if you have a credit score of less than 700, you probably won't qualify for a refinance unless you go through FHA.
Another way FHA sets itself apart from conventional lenders, besides actually extending loans, is that they now have two foreclosure prevention plans in place to help troubled borrowers: FHASecure and HOPE for Homeowners.
FHASecure is expiring on December 31, 2008. So if you want to refinance under this program, you'll need to act quickly. HOPE for Homeowners has just been rolled out on October 1, 2008. If you are facing foreclosure due to a subprime ARM or high-risk hybrid ARM, you should fill out the free loan quote on this page right away. You should also fill it out if you're paying more than the current mortgage rate and simply want to refinance for a better rate. A FHA refinance could save you a lot of money and lower your interest rates by quite a bit. And, you can have a loan to value of up to 97%.
FHA mortgage rates displayed are subject to change available loan information can provided by the mortgage lenders directly after application is submitted for further underwriting review. The FHA Mortgage Refinance Loan Company is not directly affiliated with any government agency. We provide an online marketplace for consumers searching for FHA loans and HUD resources. We are affiliated with HUD approved FHA mortgage lenders. If you would like to contact HUD directly please visit their website online.