Welcome to Refinancing Simplified! In this blog series, we set out to help homeowners learn the basics of refinancing so that they can make the most of their mortgage.
FHA and VA loans are government-backed loan programs that offer attractive benefits to qualified borrowers, including the option for a low down payment, and in the case of VA loans, no down payment (although there is a funding fee). However, what happens when you want to lower your rate or restructure your mortgage down the line with a VA or FHA loan? In short, you refinance—but you do so through specific programs associated with these organizations. The good news about refinancing a VA or FHA loan is that they require limited paperwork and less stringent lending qualifications. Here’s what you should know about each:
This refinance loan is available to you if you financed your home with an FHA loan, meaning that it is insured by the Federal Housing Administration and protects the lender. The advantages of this program include: lowered lending fees, no new appraisal required, reduced processing time, and lowered monthly payments.
If you financed your mortgage using a VA loan, you may be eligible for the IRRRL program. This loan lowers your interest rate (and therefore your monthly payment), and it requires no appraisal or credit underwriting package. You can also convert an Adjustable Rate Mortgage (ARM) to a Fixed-Rate mortgage with this form of refinancing.
Please be aware: by refinancing your existing mortgage, your total finance charges may be higher over the life of the loan.