Do you want to refinance a home in Georgia (GA)? There is more than one way to go about it. Here are some types of refi loans in Georgia you should be talking to your lender about.
Whether your current home loan is with the FHA (Federal Housing Authority) or a private source, you may be eligible for an FHA mortgage refinancing. And that could spell big savings monthly or over the course of the loan.
What Is the FHA?
The FHA is a division of the U.S. government’s Department of Housing and Urban Development (HUD). It’s loans are backed by (insured by) the U.S. taxpayer and its most basic aim is to keep the housing market strong and reliable. In fact, it was created toward the end of the Great Depression to stimulate homeownership by providing mortgage insurance and regulating interest rates.
FHA lending programs typically have more relaxed qualifying terms than private companies. People with credit scores as low as 500 are eligible for FHA loans, and it only takes a modest income to qualify, too. Down payments can be as low as 3.5 percent, rather than the normal 20 perecent. But not all property types are eligible for FHA loans. Here are some of the basic constraints:
- Your home is too expensive. FHA loans have funding limits, so if you 3.5 percent down payment doesn’t get you under that limit, you’ll have to put more down.
- Your home is not safe. The FHA has an obligation to make sure its mortgages are tied to homes that are safe, so an appraiser who thinks your home isn’t safe can put a wrench in the process for you. Ultimately, the lender will have to decide whether to make you do certain improvements before underwriting the loan.
- Your home is not the right type. Condominiums and manufactured homes can be FHA-approved, but they have more stringent requirements. For instance, condos must be HUD-approved and manufactured homes must be permanently fixed to their foundation.
FHA loans meet the needs of all sorts of homeowners. For example, the standard FHA Streamline loan is ideal for homeowners with plenty of home equity. The Streamline 203(K) is designed for homeowners wanting repairs and upgrades. And the FHA Short Refinance is one of the best options for buyers with upside-down or underwater mortgages. Read on for details.
There are many options for homeowners looking to refinance in Georgia (Photo/Wikipedia)
FHA Streamline loan in Georgia
Streamline loans are one of the easiest ways to take advantage of lower Georgia interest rates. They require no new home appraisal, little paperwork, and just a short waiting period. Sometimes proof of income is waived, too. The Streamline process is simplified in these ways because it is typically offered to people who already have FHA loans.
A Streamline loan could give homeowners the lowest current mortgage rates in Georgia (GA). However, this loan does not include the option of cashing out equity. For low Georgia refinance mortgage rates that can finance home repairs and upgrades, see the Streamline 203(K).
FHA Streamline 203(K) Renovation Loan
With the new low refinance rates in Georgia, it can be an ideal time to refinance for improvements on homes and rental properties. People who are upgrading an existing home or buying a new home that needs work can add up to $35,000 to loan packages when they refinance mortgage rates in Georgia. The 203(K) renovation loan is available with 15-year and 30-year refinance rates.
Make sure you check with your Georgia mortgage lender about what sorts of repair and replacement is covered by this type of loan. In general, structural repairs are not covered by these types of loans as they are not considered to be minor. Additionally, “new construction” is not covered. Current regulations state that repairs and improvements must be able to be completed in three months or less and—no big surprise—improvements must meet all local building and zoning codes. What can be a surprise is that repairs and improvements also must comply with HUD’s Minimum Property Standards.
The cash-out refinance in Georgia
Equity is something all homeowners covet. You have it if you have a home with a market value greater than what you paid for it. You also have equity if what you owe on your home is less than its market value, regardless of what you paid for it.
Banks let you tap into the equity of your home by creating a lending product called a cash-out refinance. If you owe, for example, $75,000 on your home, but it’s worth $100,000, lenders will pay off your mortgage and give you a new loan for $100,000. That extra $25,000 goes to you, liquid cash.
The cash-out refi is an excellent tool for paying down debt, making home improvements, funding college or affording a new car. You will be charged fees by your lender, but typically they are spread out over the course of the loan within the monthly payments. Doing a cash-out refi extends the life of your loan, so it’s not for everybody.
FHA short refinance loan
Since September of 2010, the FHA Short Refinance option has been helping homeowners who are “underwater” or owe more to banks than their homes are now worth. Georgia homeowners with credit scores of at least 500 may apply for the Short Refinance, provided that their original lender agrees to forgive a minimum of 10 percent of the remaining principal on the initial loan. With this loan option, the resulting loan cannot exceed 115 percent of the home’s value.
If you are not current on your mortgage payments, you may still be eligible for this program, but you may need to go through a three month trial period before the loan becomes permanent. Talk to your lender about the current state of the FHA’s Short Refi program; changes to the program are common.
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