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PostHeaderIcon FHA, Refinance Appraisal & Refinance Fee

FHA is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to mid income borrowers who are unable to make a big down payment. FHA loans allow clients to borrow up to 97% of their home value. For an FHA loan 3.5% down is what is required when purchasing a home. FHA refi is a great way for borrowers with less than perfect credit to still qualify for a great interest rate. Even though FHA and conventional are somewhat the same, they are still different in the way that their guidelines are a little different. FHA also allows a program called a streamline, this mean that if a borrower is already in an FHA loan they can do a refinance with out all the paper work. The basic guidelines for a streamline are that the client must already be in an FHA loan, they must not be late on mortgage, and also the refi must lower the payments or the interest rate. Also no cash out can be done with a FHA streamline refinance.

A refinance appraisal is done a certified real estate appraiser. An appraisal is an important part of the refinance. The appraisal tells where your loan to value is or also called the LTV. To do a refinance the property must not be upside down, meaning that the property must be worth more than the client owes. When a accurate appraisal is done and a borrower want to do a cash out refi, the appraisal will determine how much they can cash out. All refinance appraisals must be done by a certified appraiser before a client knows if they are a complete qualified.

Refinance fees are fees that one must pay during a refinance. There are various types refinance fees. Some of these costs are lender fees, third party fees, and pre-paid items. Lender fees consist of origination, points, application, credit report and appraisal. Third party fees consist of company closing costs, title, and title insurance. Pre-paid items are not really considered to be closing costs, these are items you pay regardless of refinancing or not. They include your taxes and insurance of your property. As a whole closing costs typically range from two to six percent of your loan amount. When the refinance of mortgage is started you will get an estimate of these costs. Also if there is enough equity in your home, the costs may be rolled into the loan. This would save you from any money coming out of your pocket at the closing. Closing costs also fit into two categories; recurring fees and non-recurring fees. Recurring fees are your monthly payments, your taxes and insurance. Non-recurring fees are points, lender fees, and application fees. All these costs for your refinance can be laid out for you in a good faith estimate which can be requested once your application is complete. Refinance fees are also known as closing costs or anything that is making your loan amount rise. If your loan amount is higher because of closing costs this due to the refinance fees.

PostHeaderIcon FHA – PMI Insurance

PMI stands for private mortgage insurance. PMI is simply a insurance for the lender to have, incase the borrower defaults on the loan. The clients that have PMI are the ones who own less than twenty percent of the property. If a client got into an eighty-twenty loan they most likely have PMI.  The way that a borrower can get rid of PMI is by refinancing once they own more than twenty percent or if their house apprises for more. For a client to get ride of PMI they need refinance and they need to have their LTV under the eighty percent mark to get away from PMI. If a client is purchasing a property and do not put twenty percent down this will mean that they will have PMI. PMI is a way that lender allow borrower to get a loan with out putting twenty or more percent down.

Refinance no cost is true, but the borrower of the loan will pay a slightly higher interest rate. The cause of this is because the mortgage company need give a higher rate compared to borrower who pays the closing costs. Typically, the loans have interest rates about 0.25 to .50 percent higher than other loans. The more interest is reworked as a yield spread for lenders, and it shows as a fund from which closing costs can be paid. The thought that many borrower have is “is no closing costs a good idea”? If you are planning to stay in the home for a short period of time than a no cost refi may be a good option for you. If you are planning to stay for a longer period of time than getting the lowest possible interest rates available would be a better option.

An FHA refinance is basically the same as a conventional refinance just that FHA requires to mortgage insurance. FHA loans are made to make housing more affordable for first-time homebuyers and those with low to moderate income. Also FHA only requires that a borrower puts down 3.5%. The mortgage insurance that FHA requires is because they take the higher risk loans. If a client is already in an FHA loan they can do a streamline, which mean that you’re doing a rate and term without and appraisal, credit check, etc. The best way to learn about what FHA has to offer is by calling a financial company and speak to a licensed loan originator.

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