When you compare the advantages of an FHA refi versus an unsecured loan there are a lot of benefits to taking out a FHA home loan. If you own your home and have decent credit then by all means you should take out an FHA loan. The main advantages of FHA refi are that it is much easier for the average homeowner to qualify for. Here are some more advantages that may help you make a decision:
New Rate: There are several advantages to receiving a new FHA rate. The first advantage is that most borrowers will receive lower new rates when taking out a FHA loan program. This is because the FHA rate table is updated each year and the rates tend to increase over time. Another advantage to getting a new FHA loan rate is that if you have poor credit you can still qualify for a better interest rate. Borrowers with poor credit will usually qualify for a fixed interest rate and for a larger loan amount. If you go through a good lender you will find one that will work with you and help you obtain an FHA loan without many disadvantages.
Net tangible benefit: Another advantage of an Fha refinance is that borrowers can get a net tangible benefit. This is where the value of your house is less than the value of everything that is attached to your home such as mortgage payment and insurance premiums. Your lender will pay off your loan and you will be left owning nothing. The benefit of this is only really received if the borrowers qualify for a substantially higher income or home value than the current market value. If the current market value is more than the loan amount or mortgage payment then most lenders will allow borrowers to borrow money under these conditions.
Fewer headaches: Another advantage of streamlining the Fha refinance loan process is that it can make life easier for current mortgage borrowers. Often it is frustrating to deal with confusing and complicated refinancing processes. By taking advantage of the streamline process you will be able to focus on other important aspects of your life. In addition, many FHA lenders now offer pre-approval for some borrowers so they do not have to go through the entire refinancing process all over again.
Homeowner Debt Consolidation: One other benefit of taking advantage of a streamline Fha refinance loan program is that you will be able to reduce the amount that you pay on your monthly mortgage payments. Most lenders will require that borrowers use at least 20% of their monthly gross income to cover mortgage interest. The problem with this is that many borrowers cannot meet this requirement. If your mortgage payment requirement is too low you will be hurting your financial situation rather than helping it. A lender will require that you use at least a 30% level of your gross monthly income to pay on the loan.
