FHA's Simple Refinance
On 9-14-2015, HUD has released new FHA Guidance that includes dozens of changes to FHA Rules for qualifying borrowers to purchase and refinance homes. This article will focus on FHA's new Simple Refinance. The new FHA Guidelines eliminated that FHA Streamline Refinance with Appraisal. This Streamline was beneficial to some FHA refinances as the Closing Costs and Prepaid items such as Property Tax and Insurance could be included in the Loan. With a FHA Streamline without Appraisal, the Closing Costs and Prepaid items such as Property Tax and Insurance must be paid either by the borrower in cash, by a Lender Credit, or a combination of the two (most common option).
What is the FHA Simple Refinance?
The FHA Simple Refinance allows you to refinance your current FHA Loan into a new FHA Loan. The Simple FHA Refinance requires credit qualification and Appraisal. Credit Qualification is the process of analyzing credit, income and assets to ensure the borrower qualifies for the new loan terms. This loan can include all of your Closing Costs and Prepaid items in the loan amount as long as the Appraised value supports the numbers. (OK up to 97.75% Loan to Value).
Why would I want a FHA Simple Refinance vs a FHA Streamline without Appraisal?
Every situation is different, and we advise that you contact us to review both options to see which makes the most sense for your goals. The FHA Simple Refinance would have very low out of pocket costs and may even make a lower rate more workable for situations where there is equity available. The FHA Streamline Refinance without Appraisal is perfect for situations where the home hasn't increased in value much, or where adding the closing costs to the principal balance doesn't fit with a borrowers long term plans (such as plans to move or sell within a few years).
>>> We offer free analysis of your FHA Refinance options. Contact us online to get started now or call direct at 866-900-2342.