Should you Refinance your FHA Loan to a Regular Loan

Often times, homeowners are faced with the challenge of knowing which financing option is best for them and they ask if they should refinance their FHA loan to a regular loan. In this article, we would be taking a look at both financing options in a view to help you determine which is best for you. So first let me explain what each are.

Meaning of FHA Loan

A FHA loan an FHA loan is a government insured loan which means that if a bank issues an FHA loan and let’s say they loan it for a $100,000 mortgage and then I the borrower refused to pay it then the government’s FHA’s program will compensate the bank so that the bank doesn’t lose as much money from not having to foreclose and that whole thing. The government does this because they want to help more people afford mortgages now why would that help them afford mortgages here’s why because FHA allows for a lower down payment. Then therefore to buy a property you don’t need a full 20% like a regular loan.

On the other side of this equation, a regular loan usually requires 20% down. Anytime you are buying a property and you put less than 20% down there’s a thing that kicks in called mortgage insurance PMI or in the case of FHA they have their own name for it MIP and so it’s basically monthly payment that you have to pay because you have to pay the bank to cover the FHA. It is kind of like the payment for the insurance, so it’s not like the government on the FHA loan just wants to be nice to you necessarily and giving you this low down payment. They are charging everybody that gets an FHA loan or any under 20% loan, the insurance companies are charging a fee for this ability to have a cheaper loan and so it adds on to your payment.

FHA Versus Regular Loan

Now this is not exact but it’s fairly good to estimate that every hundred thousand dollars that you financed for PMI is going to be about a hundred dollars, again it’s not exact but it is pretty close. So if you had a $200,000 mortgage and you had to have PMI on it, it is probably going to be a couple hundred dollars a month. So as you can imagine that would add quite a bit to your mortgage, so let’s just say you bought that $200,000 property and you put 3 ½ % down not only is your payment higher than a regular loan because you have a higher payment because you didn’t put as much down like you have a higher balance you also have this PMI. So let’s just say there’s a property you want to buy and it is $200,000 now you could use an FHA loan which is three and a half percent which is $7,000. So you are putting $7,000 down meaning you’ve got a mortgage now for a $193,000, now you are going to have some closing costs too so let’s just round up you’re going to pay about $10 to a $100,000 property.

For a regular loan, 20% of $200,000 is $40,000 plus you know let’s say $3000 for closing costs so you have got $43,000 to buy it and you’ve got $10,000 for an FHA. So you can see the difference, at least the FHA is cheaper. However, on one hand the regular loan is for a $160,000 because we put $40,000 down while on the FHA we have a mortgage for $193,000, so it’s a much higher loan balance there for a higher monthly payment and then you’re going to add on the monthly PMI charge on top of that so now not only do you have the higher payment you have the PMI as well and so in terms of which is better the reason I can’t say one versus the other is certain situations are going to be better or worse and so what I like to see is I think of like a rental. FHA can’t be used for rental properties but it can be used for like a duplex or a triplex or a four-plex as long as you plan on living in the property for a year.

So what I’m driving at here is the idea of if you’re going to use one of the two maybe look at your return on investment especially if you’re doing this house hacking idea of living in a duplex triplex or four-plex you can kind of look at your return on investment but you can do it with a single-family house as well what kind of like return are you getting you in one way versus another is it costly would you be better off saving that money and investing it in the stock market or in another rental property or another hedge fund or I don’t know whatever you want to do with your money like do you have another use for the money.

FHA Secure Loans, Getting Out of Adjustable Rate Mortgages


Choices for an FHA refinance loan are available to any homeowner eager to refinance so one can decrease your monthly home loan payments. It is best to try to locate a mortgage company who may help you choose which type of FHA refinance home loan most accurately fits before you proceed with taking one out.

What are FHA Secure Loans?

FHA secure loan is a program that allows homeowners with non-FHA adjustable rate mortgages, current or delinquent, the ability to refinance into an FHA insured mortgage.  The homebuyer must have been current on their mortgage payments prior to the adjustment of their variable interest rate and must be able to document that the change in their interest rate has caused them to become delinquent.

How Much Can I Refinance?

The amount you may refinance will depend on the present value of your home and how much you currently owe on your home.  FHA requires that you have at least 3% equity in your home.  Most homebuyers will not be able to meet this standard because they bought their home with little or nothing down.  In addition, we have experienced a decrease in our home values.  Should this be the case, you would need to contact your present lender and ask them to “forgive” some of your loan balance or find a lender that is willing to provide a second mortgage for the difference.  Securing a second mortgage in today’s market is very difficult to do. More details.

What if I have a Second Mortgage?

If you already have a second mortgage on your home, FHA will allow you to keep your second mortgage loan open even if this means you owe more on your home than it is worth.  For example, if you originally purchased your home for $250,000 and took out an 80/20, you would have a first mortgage for $200,000 and a second mortgage for $50,000.  If your present home is valued at $220,000, then you would be upside down $30,000.  Your new FHA first mortgage would be $213,400 which is 97% of the new appraised value.  Your present lender on your second mortgage must be willing to sign a subordination agreement which allows the second to remain open and keeps them in 2nd position.

How Do I Qualify?

Finally, you must be able to qualify for an FHA loan.  FHA loans are full documentation only.  This means that you must be able to provide pay stubs, W2’s and tax returns to support your income.  Many buyers who originally purchased their home with stated income loans will not be able to qualify today.  You may be asking yourself why I should consider this option?  The answer is very simple.  FHA loans do not have “teaser rates,” prepayment penalties or balloon payments.  FHA loans are offered at market rate and are fully amortizing loans which means that you are reducing your principal loan balance each month.


The FHA refinance loan are best for your circumstances, according to your present financial status, after which assist you to locate a mortgage banker who will extend the refinance mortgage loan. Check out this:

What a Reverse Mortgage Calculator Won’t Tell You


There are a number of calculators to be found online. However, you may find that the amounts illustrated differ from one website to another, even when the same dates and amounts are entered. If you’re going to choose for either FHA reverse mortgage or a Fannie Mae, then the best reverse FHA mortgage calculator can be found at either the AARP or National Reverse Mortgage Lenders Association (NRMLA) websites. Both are accurate, display identical figures, and display most of the crucial information, such as how much you’d receive as a fixed monthly payment, a line of credit (and how much that line of credit would appreciate over 5 and 10 years for the FHA program) or how much you’d receive as a one-off lump sum.

While having this free form of a reverse FHA mortgage calculator may somehow be able to provide you with an idea on how much money you will borrow, no one will be able telling you about something which is far much important, and that is how much equity will be left in your home after a period of years. It’s crucial you are aware of this before you make any decision on whether to opt for this type of loan.

But, if you opt for a jumbo program, you’ll need to use that company’s proprietary calculator. These calculators will also provide you the Fannie and FHA amounts though it tend to come out to be less accurate. This Financial Freedom kind of calculator was being spread widely.

What it won’t tell you is how much equity would be left in your home after a number of years. This is important. How this type of loan works is that the lender agrees to pay you a fixed amount over a period of time—usually as monthly payments. When you no longer live in your home, sell it, or die, the loan—in its entirety—must be paid back. This is usually done by selling the home. Any money left after the loan is paid you get to keep. Learn more detailed information at

If house prices fall, you or your heirs would receive less money from the sale of your home or even none at all. Likewise, a rise in interest rates would also be detrimental.

No calculator illustrates these two, what-if scenarios. Therefore, when using one, be aware that it will show you what you’ll receive but not the amount of loan that will have to be paid back in say 5, 10 or 15 years from now.fda

A reverse FHA mortgage calculator works by using the equity value of your home, its location, your age (and partners), and current interest rates. It then performs the calculation and gives you an indicative illustration of what you’d receive.

This is why you should speak to your local originator (broker) as soon as possible. Don’t be blinkered by what you get now, but think about what you’ll be left with in years to come. And, don’t say it doesn’t matter because you intend to stay put in your home until you die and you don’t care about your heirs; circumstances change. You must put some thought into this aspect of your reverse mortgage right from the start. It’ll be too late after you take it out and are receiving money.

FHA Mortgage Home Loan Credit Requirements


FHA Refinance can offer various options for you to choose from who are likewise considering FHA Refinancing Mortgage loans; thus refinancing using an FHA loan will prove that it is an effective way to put that equity to work. Refinance loans can be used to help with many personal financial situations like reducing monthly payments and all.

It is not applicable for everyone to get this approve we need to have certain requirements. Today, most of the homeowners are struggling with monthly repayments on their home. In this case, they can go directly for FHA Refinance and they will able to afford it. FHA is Federal Housing Administration that is authorized by congress to offer full loan coverage and also makes the lenders to expose who are providing less debt and also ensure them to get higher competitive rates. Also, there is a hope for a homeowner’s plan, which allows refinancing of such a loan to maximize its affordability. FHA mortgage home loan can be computed accurately by using FHA mortgage calculator.

The first thing to understand is that there is no specific score requirement specified by FHA. The loans are underwritten based on overall credit profile of a borrower. Most lenders use automated systems like Desktop Underwriter by Fannie Mae or Loan Prospector by Freddie Mac, along with investor specified credit score requirements to determine eligibility. If your loan is an auto approved through DU or an LP and the score requirements had met then those other factors by underwriters, such as late repayments, charge offs are accepted, and collections. Generally, a prospective buyer may not like to pay charge offs or old collections and this may be possible on an auto approval.

Credit requirements for FHA loans are comparatively less stringent compared to

• Conventional Mortgage Loans
• VA Mortgage Loans
• USDA Home Loans

Credit Scores Below 620

Few FHA Home Loan lenders will accept such borrowers, if they have NO NEW late repayments in the last 12 months. Any new collections or charge-offs opened as a result of late payments before the last 12 months are considered OK. need more details? visit

No Active Trade Lines or No Scores

The same principle applies. Some FHA Home loan lenders will accept such borrowers if they have NO NEW late payments in the last 12 months. Any new collections or charge-offs opened as a result of latest before the last 12 months are considered OK only if non-traditional credit can be established. non-traditional credit for 12 months can be documented in the form of rent payments, telephone/cell phone payments, electricity, water, garbage, cable, storage or any other payments made consistently for the last 12 months. Generally, a combination of 4 traditional or non-traditional lines are required.calculate

Judgments and Tax Liens

Judgments and Tax Liens are a different ball game as these affect the title. A 12-month history from the IRS may be accepted by certain lenders and prospective buyers may not be asked to clear the entire outstanding tax lien in one go. Judgments normally need to be paid.

Credit Scores 640+ or 620+

Credit requirements required by majority FHA Home Loan Lenders has already been increased to 640 for the past few months. The earlier score requirements were 620. There are some lenders who will finance borrowers with 620+ FICO. There are no additional pricing hits for FICOs being below 640 and above 620. For an easy computation for this, you use HFA mortgage calculator to be accurate.

Advantages of Using A FHA Mortgage Calculator


Mortgage Calculator

An FHA Mortgage calculator is an effective tool to maintain a fixed budget when looking forward to buy a home. It can be used to calculate the loan amount which can be borrowed by you. The users are just required to enter the financial and personal information in order to get a rough amount of loan.

Benefits Mortgage Calculator

A mortgage calculator is the best device which can be used by you to determine the monthly payments which need to be paid. You can use this device for negotiating a loan.

• Using this calculator you will come to know the exact value of the mortgage amount. In order to get the right amount, you are required to enter the loan amount you wish to borrow, time period of the loan and interest rates. Thus, you are provided with a value within your budget ensuring that you do not take a loan more than you can afford.

• The best thing about this mortgage calculator is that it can be used easily. You are also not required to provide more information. The only things that you need to enter are the term, interest rate, and the loan amount. visit their official website for more updates.

• The major benefit of using a mortgage calculator is that it allows the individuals to settle down with a loan according to their budget. Most of the individuals are generally concerned about the monthly payments that need to be paid in order to repay the loan. By using this effective tool you can easily make out the best deals ensuring that you are not over burdening yourself.

• A slight difference in the rate of interest can make a great difference in the monthly payments. You can use the calculator to determine the various rates of interest and monthly payments and select the one which is most appropriate for you.

• These FHA mortgage calculators are easily available and you can get access to them by visiting any of the loan providing online sites.

• It also provides you an opportunity to decide between adjustable and fixed mortgage rates. You can make a comparison between the benefits offered by the two and select the most suitable one.

• This device can also be used to take a final decision regarding refinancing

• Using a mortgage calculator, you can easily make a comparison between different products offered by different companies.
After going through the various benefits offered by the mortgage calculator, you will be surely impressed with the way it sort out loan related problems in an easy manner. checkout latest news at

Owning for a property and or of a home may not only gives value towards your life thus, it also plays such a significant role in saving your taxes. Home loans through Federal Housing Administration have been introduced with the main aim of providing support to the individuals in acquiring a home. There are various things that need consideration in the process of getting a loan. The first most important thing while considering a new loan is to determine the budget. It is essential that know your capability to afford the loan. If you wish to evaluate your budget accurately, you can use an FHA Mortgage Calculator. It is an effective tool to manage your loans.