FHA loans are a great way for first time home buyers to secure financing to purchase a home especially if they have less than perfect credit or lack a large down payment. FHA loans are accessible to a wide range of people and are backed by the government so they aren’t as risky as other types of financing.
Another reason FHA loans are a good route to consider is that if you decide you would like to sell your home, it is an assumable mortgage, which means the loan can be transferred to the new buyer. Your credit score is very important when discussing finances with a lender so you want to do whatever you can to make sure it’s at the highest it can possibly be, but it needs to be over 580 for an FHA loan. You’ll also need a down payment but it’s only 3.5 percent which is a lot less than you would need for other mortgages.
What Is An FHA Cash-Out Refinance?
Whether you’re cashing out an FHA loan or a VA loan, the main reason to do so is to borrow money against the value of your home. The cash can be used for a variety of reasons like home improvements or even paying off credit cards. They can also be used to get a lower interest rate as well. Because the restrictions are a little bit less strict, it can provide an opportunity for those with lower credit scores to qualify. You will also need to provide proof of income that is verified by paystubs, W-2 forms, or a tax return.
FHA cash-out refinance loans can be beneficial to consumers, but they also have their downsides . They do require insurance premiums so some additional cost is required as well as mortgage insurance which must be paid monthly. Another requirement that lenders will request for FHA cash-out refinances is an appraisal on the property which is used to determine the amount allowable for the loan.
How Do I Qualify?
There are requirements in order to receive an FHA cash-out refinance loan which can differ from lender to lender but the general requirements are:
- Minimum credit score of 600
- Cannot be owned by anyone else
- Timely payments
- Mortgage must be six months or older
- Debt-to-income ratio below 41 percent
Reach Out Today!
If you are looking for some extra funds to pay off some bills or maybe do some renovations an FHA cash-out refinance might be the best choice for your situation, don’t hesitate to contact us Family First Mortgage in Lafayette, LA today!