It is easy for borrowers to get overwhelmed by the high mortgage rates currently offered. However, even those who plan on buying a new home should consider refinancing with the help of an FHA mortgage loan. The FHA mortgage has become increasingly popular for home rehabilitation, refinancing and first time home buying. Borrowers often trust FHA mortgage rates year after year simply because they’re so competitive, and the fixed streamline allows borrowers to easily refinance when the current FHA rates drop below the current average rate.
Before you decide to refinance an FHA home loan, it’s important to understand how this type of mortgage works. When you buy a home, the mortgage is typically backed by a fixed interest rate. This interest rate is usually higher than the going rate at the time of purchase. This is the “base” rate that all future mortgage payments are based on. In order to maintain this fixed interest rate, the federal government must make certain adjustments to the interest rate for the home. Usually these adjustments will reduce the mortgage payment for the borrower.
Although it is difficult to anticipate where mortgage rates will be in the future, there is no better time than the present to consider refinancing an FHA home loan. The current trends in the mortgage industry point to mortgage refinancing as one of the few options available to homeowners. The Federal Reserve Bank of America has indicated that it is concerned about the low levels of residential construction and is considering measures that would help support residential building. On top of that, recent reports show that the subprime crisis has significantly reduced the demand for FHA mortgages.
If you are considering refinancing your FHA mortgage, it is important to understand that you have several different options available to you. The most popular option is a refinance of a principal residence that is already owned. In order to qualify for a refinanced mortgage on an FHA loan, borrowers must be the owners of a FHA loan and the homeowner must be the owner of at least one other residential property. The second most popular option for FHA mortgage refinancing involves a transfer of an FHA insured loan to a third party. A transfer of an FHA loan does not automatically result in a refinance of an FHA loan because the agency does not provide a guarantee that the third party buyer will repay the principal loan balance.
Even with the current mortgage rate environment, there is still considerable opportunity for savvy investors. Mortgage refinancing can be used as an exit strategy when the market shows little chance of recovering. Once the mortgage rate begins to rise, a refinance of an FHA loan could result in significant savings. This is especially true if the interest rate on the new mortgage is close to or exactly equivalent to the currently prevailing interest rate.
When shopping for an FHA mortgage, you should understand that the process of refinancing will probably delay the closing date of your loan. Because of this, you should plan to budget for additional time before you proceed with a refinancing decision. If you plan to use a refinance as part of a package of homebuyer loans, you should also plan to schedule an appointment with your lender to discuss possible interest rate reductions.
Some housing experts believe that future government programs, including the FHA Secure Loan Program and the Home Affordable Modification Program (HAMP), may further drive down mortgage rates for first time home buyers. However, mortgage rates are still quite low and remain among the lowest they have been in over 10 years. If you plan to purchase a new home, you should consider these government programs as another way to obtain affordable mortgage loans.
Many home buyers today are concerned that refinancing an FHA mortgage may not be affordable. Fortunately, many lenders are still offering competitive refinancing rates even for those who need help with their financial situation. There are various reasons why a refinance may be more affordable than a traditional, fixed-rate mortgage. In addition, if you need help with your monthly finances, you should consider refinancing as a means of reducing your debt and increasing your monthly income. To learn more about finding the best mortgage deals for your individual needs, you should consult a qualified loan specialist.