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If you're having trouble sleeping at night because your ARM (adjustable rate mortgage) will be resetting soon, you need to consider an FHA refinance loan.
The sticker shock most borrowers experience when they receive their new mortgage payment is enough to put many into foreclosure... however you do have options that can keep your payment reasonable.
An FHA refinance loan is a perfect solution for borrowers whose ARMs are coming due for many reasons…
Here are the main reasons to consider an FHA refinance loan:
- No minimum credit score. FHA sets no minimum FICO score for borrowers to qualify. This means if your credit is bad you can still qualify.
- Only need 3% down payment. Many times the equity built up in your house will be enough to cover the down payment. This means no cash out of pocket at closing for you.
- FHA allows your mortgage payment amount to be up to 35% of your gross monthly income. Compare to 29% conventional.
- The Federal Government insures lenders making the loan to you – so there is no risk to the lender once you're approved for an FHA loan.
- Competitive interest rates – April of 2008 a '610 FICO score' was qualifying for a 6.125% interest rate on a 30-year fixed with many lenders.
Basically, your FHA lender will look at your overall financial situation - not only your credit score, which makes it much more likely that you'll qualify. This is why these loans are so popular – many borrowers CAN'T qualify for the 20% down payment on a conventional loan but can easily move into an FHA refinance loan.
To find specific lenders who specialize in FHA loans visit the link below.
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