The Federal Housing Administration of the United States of America has been a steady shoulder to rely on people who wishes to realize the dream of having their own house, providing different housing loans to complement different types of financial levels and situations, namely Adjustable Rate Mortgages, Fixed Rate Mortgage loans, Energy Efficient Mortgages, Graduated Payment Mortgages, Mortgages for Condominium Units, and Growing Equity Mortgages.
The FHA has two main programs for refinancing, cash out and streamlined. Cash out refinancing is for loan borrowers whose house has gained considerable appreciation, and thence equity or market value from the time they have acquired the said house. Through cash out refinancing, loan borrowers can draw money from the FHA through using the equity of the house as a collateral. Acting as a second mortgage, cash out refinancing enables the home owners to pay their dues to the primary loan, and still have enough money to finance other expenses like tuition, medicine, home repairs, etc.
Hence people who can maximize FHA’s cash out program are those whose house have significant increase in equity. The higher the equity the house has, the greater money that its owner can cash out from the refinancing account.
FHA’s streamlined refinancing account are for those who don’t necessarily need a big cash out, but want to significantly lower their monthly housing loan payment. This type of program primarily enables home owners to lower the interest rate of their home loan, providing them more money for extra consumption.
FHA, inspite of its link to the government, still require strict qualifications before granting any type of refinancing account. Home loan refinancing applicants must have a good and steady employment history, consistent if not growing salary over the past two years, and a good credit report. The applicant too must not have experienced any major bankruptcy for the past two years, and to ensure good credit standing, her loan payment must be thirty percent of her total monthly gross income.