When you decide to apply for an FHA Refinance loan, there are several questions you’ll need to answer to set the approval process in motion. Some questions are about planning issues, others are directly related to whether or not an FHA Refinance loan is for you.

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FHA Refinance Questions You'll Need to Answer

When you decide to apply for an FHA Refinance loan, there are several questions you’ll need to answer to set the approval process in motion. Some questions are about planning issues, others are directly related to whether or not an FHA Refinance loan is for you.

WHAT KIND OF FHA REFINANCING DO I NEED?

If you have a conventional home loan and want to get into a lower interest rate or lower your monthly payments, consider applying for an FHA refinancing mortgage. If your home loan is an FHA mortgage, you can apply for an FHA Streamline mortgage--an FHA loan which is designed to be quick and easy to apply for and receive. You don’t need to go shopping for a conventional home mortgage refinancing package if you qualify for an FHA Streamline loan.

IS MY LENDER WILLING TO HELP ME REFINANCE OR SHOULD I SHOP AROUND?

Banks aren’t required to offer FHA loans, participation is strictly voluntary. If your loan officer says your current bank doesn’t want to pursue FHA refinancing options in your case, shop around for a participating lender who can help. You’ll find plenty of reputable financial institutions willing to help.

WHAT IF I PREVIOUSLY FILED FOR BANKRUPTCY?

Bankruptcy doesn’t automatically disqualify a borrower for an FHA refinancing loan or an FHA Streamline loan, but there are some things to consider. Chapter 7 or Chapter 13 bankruptcy doesn’t look good on a credit report, but if you have made your payments on time and have lived up to the terms of your bankruptcy agreement, an FHA refinancing loan may still be approved. Always discuss the specifics of your situation with your loan officer. You may be surprised to learn you’re still eligible for an FHA refinancing loan.

WHAT ABOUT MY CREDIT SCORE?

When applying for an FHA refinance mortgage, there may be a space on your application for you to rate your own credit. Some lenders will perform a credit check instead of asking you about your credit. If you have bad credit, you aren’t automatically disqualified from an FHA refinance loan. FHA mortgages are intended to help people get into and keep their homes; borrowers with evidence of recent on-time payments and your overall pattern of good credit behavior can help. You can still be considered for a refinancing loan through the FHA. Those who have financial difficulty often find a second chance thanks to FHA mortgage refinancing. Never simply give up and assume you shouldn’t apply—let your loan officer help.

HOW MUCH OF MY INCOME GOES TOWARD MY CURRENT MORTGAGE?

The amount of your current income and the amount you pay for your existing mortgage are a vital part of the application process. Come to the table with exact figures and don’t forget to include any extra income such as your spouse’s salary or income from a part time job.

WHAT ARE THE OCCUPANCY REQUIREMENTS?

Newcomers to the FHA loan process are sometimes unaware of the occupancy requirement for an FHA refinance loan—you must live in the property you are refinancing. This requirement may not be a factor when you take out a conventional mortgage, but when applying for FHA loans and refinance loans, you’ll find the occupancy requirement becomes a key issue. This applies even when you apply to refinance a multiple-occupant home such as a duplex or condominium; these instances are covered by rules specific to each FHA refinancing program.

You’ll learn about many differences between FHA Streamline refinancing and refinancing from a non-FHA mortgage into an FHA loan. Streamline loans, for example, allow you to avoid a new appraisal of the property while an FAH refinance loan on a property purchased with a conventional mortgage may require a re-appraisal in some cases. Ask your lender about your specific needs.