Question by Boatalot: We have a FHA Mortgage with 0 down. We have paid on our mortgage for 2 years. Can we refinance the FHA to low?
We’d like to refinance the FHA mortgage to a lower interest rate. Can we do this since we don’t have 20% of the 30 year mortgage paid down yet? Any tips we should know about?
Best answer:
Answer by Vegas
Most banks now require 20% equity. Good luck finding one. It may be hard though.
Add your own answer in the comments!
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Question by Marci S: How does an FHA home loan differ from other home loans?
I’m looking at houses online and some of them say FHA buyers welcome. Does this mean that some people don’t want to deal with someone who has an FHA loan? Please also tell me anything you know about FHA loans. Thanks.
Best answer:
Answer by Dan P
A Federal Housing Administration (FHA) loan is a popular way to buy homes now which involve only 3.5% down as opposed to the conventional loans that require 20%. This means more money in your pocket. The trade-off is that the payments are a bit higher (~100 dollars) for the first 5 years.
Not all lenders are FHA approved, and as the government has strict regulations over who can do them. This means that a realtor needs to know loan officers who are FHA approved to offer that loan program. FHA makes the programs, FHA-lenders carry them out.
For more information about FHA loans visit the HUD website. http://www.hud.gov/buying/loans.cfm
Edit:
ExpertRealtor, not to be nitpicky, but you did not say anything that was different from what I said… And actually, it is you that is mistaken, there ARE strict guidelines to be FHA approved… If you’ve been watching the news recently, earlier this May 2009, about 120+ lenders were dropped by HUD for writing loans “the easy way” as you so fondly put it… Please keep your community answers to relevant and updated information for August 2009… Thank you.
source:
http://www.hud.gov/news/release.cfm?content=pr09-070.cfm
What do you think? Answer below!
Ok…Dan P doesn’t know the full scope of how FHA loans work.
FHA only insures loans…they do not make loans directly. They are technically “FHA insured loans” because they are insured by FHA, but private lenders lend the funds for the loan.
FHA does NOT HAVE STRICT GUIDELINES ON WHO CAN DO FHA LOANS.
The reason smaller lenders choose not to do FHA loans is that the application fees to get approved are in the thousands of dollars..small lenders don’t see FHA insured loans as being profitable enough to go to the trouble.
Loan officers do not have to have any type of special certification or training to do FHA insured loans…neither do Realtors.
FHA underwriters, however, do have to be approved by HUD to underwrite the loans….and it’s not an easy certification to get.
The only thing that is different is a few extra documents that the bank has to process and a couple of extra guidelines…all designed for your protection.
People think that FHA loans are difficult to close or some kind of mystery…there is no mystery for those that understand how they work.