Refinancing with an FHA Loan
An FHA (Federal Housing Administration) refinance loan is a government-backed program that typically offers more flexibility when it comes to requirements, interest rate and closing costs. Loans are available for fixed-rate, adjustable-rate and cash-out refinance options.
FHA Adjustable-Rate Mortgage (ARM) Refinance
Homeowners start with an introductory rate for the first few years before it adjusts every year after. With an ARM, your monthly payment is typically lower since the rate starts lower. ARMs are great options for people who think they may move and sell the home within five years.
FHA Fixed-Rate Mortgage Refinance
Choosing between a 15-year or a 30-year fixed-rate will make the difference in your monthly payment and how much goes toward the principle balance. A 15-year loan will have higher payments but will build equity faster (while also ensuring you pay off the loan quicker). A 30-year means you will have a lower monthly payment, more goes to interest and you don’t build equity quite as fast.
FHA Cash-Out Refinance
If you've been in your home for some time or you've made some upgrades – or both – chances are your home may be worth more than what you owe on your mortgage. The difference between your home's value and what you owe on it is your available equity, and when you choose a cash-out refinance, you can gain access to that extra equity as cash.
FHA loans exist to be a more affordable options for homeowners and home buyers. If you’re interested in learning more about your FHA refinance options, contact a PrimeLending loan officer.