Federal Housing Administration (FHA) loans generally help those who have less than perfect credit buy or refinance a home. As stated by the Zillow website,”The FHA program was in place since the 1930s to help stimulate the housing market by making loans affordable.” FHA insures mortgage loans to shield qualified lenders from loss in the case of default, and needs homeowners to pay a mortgage insurance premium, which is added to the amount of the loan. Getting from an FHA mortgage can help you avoid monthly mortgage insurance premiums and in the majority of cases secure a lower standard rate of interest.
Get a copy of your credit report using an internet resource. Review your credit report and verify that your information is being reported accurately.
Make payments on credit card balances which are above 30 percent of your credit limit and pay off all past-due collections, charged-off accounts or judgments. The credit requirements for traditional loans are more strict than the FHA underwriting guidelines. Improving your credit rating and credit rating can improve your chance of acquiring a lower-rate traditional home mortgage.
Review loan choices with your current mortgage lender. Generally, your existing lender can refinance your loan for a lower price than other mortgage lenders. Ask about loan programs supplied by your current lender.
Compare programs from several mortgage lenders using a comprehensive real estate financing website. It is possible to refinance your FHA loan by choosing a traditional loan by a network of lenders.
Submit your application for a traditional home loan. Forward items that your loan officer may require like bank statements, tax records and pay stubs.
Sign your closing documents to finalize your refinance transaction. Meet with a title company representative to review and sign your loan documents.