FHA introduced a new refinance loan allowing borrowers to combine first and second mortgages while also receiving cash from the equity of the home. The loan amount is limited to 85 - 95% of the appraised value depending on credit and loan amount. Many lending companies have loans similar but the maximum percentage of the value they allow is 80%. The reason it’s become popular to combine two mortgages is because of the high and/or fluctuating interest rates on the mortgages. FHA refinance loans are great for consolidating first and second mortgages for reduced interest rates that save money while enabling homeowners to receive cash back at the same time.
These FHA home loans can especially help people save money that have mortgage rates that are much higher than the market rates are today. If the mortgage rates are two points higher than what can be obtained today, the homeowner could save a couple of hundred dollars a month by simply combing the loans with one lower interest rate. Another reason that makes this type of loan popular is when the mortgages contain an ARM (adjustable rate mortgage) which allows the interest rate to fluctuate. Currently the interest could be low, but in the long run the interest rates are sure to rise. When this takes place the mortgage payments will increase. Thinking ahead and using FHA refinancing for combining first and second mortgages can be very smart thinking.
Another great advantage of the FHA cash out refinancing for combining first and second mortgages is for debt consolidation; combining credit card debt and other high interest loans with the cash that can be obtained from the refinance. A common credit card interest rate is about 20%. Instead of paying a balance off battling with a 20% interest rate, the homeowner can pay off the credit card/s while just having one mortgage payment to keep up with at a much lower rate. This same concept works for well for paying off car loans at high interest rates also. Other ways many people use the cash is for home improvements and paying for college. Using the equity that a person has built up can be great way to obtain money for something that is needed.
FHA cash out refinancing for combining first and second mortgages have a few FHA requirements to be approved. The homeowner must have lived in the home for at least twelve months, and it must be a one or two unit dwelling. Payments for the last twelve months need to have been paid less than 30 past the due date. Overall this type of FHA loan can be a help to many Americans.
These FHA home loans can especially help people save money that have mortgage rates that are much higher than the market rates are today. If the mortgage rates are two points higher than what can be obtained today, the homeowner could save a couple of hundred dollars a month by simply combing the loans with one lower interest rate. Another reason that makes this type of loan popular is when the mortgages contain an ARM (adjustable rate mortgage) which allows the interest rate to fluctuate. Currently the interest could be low, but in the long run the interest rates are sure to rise. When this takes place the mortgage payments will increase. Thinking ahead and using FHA refinancing for combining first and second mortgages can be very smart thinking.
Another great advantage of the FHA cash out refinancing for combining first and second mortgages is for debt consolidation; combining credit card debt and other high interest loans with the cash that can be obtained from the refinance. A common credit card interest rate is about 20%. Instead of paying a balance off battling with a 20% interest rate, the homeowner can pay off the credit card/s while just having one mortgage payment to keep up with at a much lower rate. This same concept works for well for paying off car loans at high interest rates also. Other ways many people use the cash is for home improvements and paying for college. Using the equity that a person has built up can be great way to obtain money for something that is needed.
FHA cash out refinancing for combining first and second mortgages have a few FHA requirements to be approved. The homeowner must have lived in the home for at least twelve months, and it must be a one or two unit dwelling. Payments for the last twelve months need to have been paid less than 30 past the due date. Overall this type of FHA loan can be a help to many Americans.
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