FHA Home Loans For Cash Out Refinancing
FHA home loans have quickly become the mortgages of choice for cash out refinancing and new home buy financing. Raising capital with a home mortgage was definitely more easy in past years. As many consumers have found out the hard way, home equity loans have nearly become extinct. Unless you have perfect credit and are able to provide complete income documentation to the lending underwriter, you don’t have a shot. Did I mention you also need to be under eighty percent loan to value in addition? Just last year no equity was required to get cash out with 1st or 2nd mortgage refinancing. After record breaking number of foreclosures every month, most lenders wised up and cut off the home equity loan product line.
In 2008, the thirty year fixed rate mortgage remains competitive and historically pretty low averaging in the mid six percent range all year. For the first time, FHA mortgage loans truly dropped below the traditional interest rate levels. FHA home loans typically carry a little bit of a higher rate because of the increased risk factor that goes along with no equity and lower credit score requirements.
Home financing analysts anticipate that mortgage rates should steadily increase in 2009 and 2010 in an effort to prevent more inflation. Over the last few years, most homeowners have refinanced to an interest rate they are very comfortable with.
With all of the foreclosure scares and loan modifications being offered by lenders, its a surprise that anyone is refinancing these days. Believe it or not, if you get outside of California, it’s business as usual in most parts of the country. Areas like North Carolina, South Carolina, Texas and Oklahoma have truly reported slight increases in home values in certain counties.
With the market changing, it is important for homeowners to understand how FHA home loans work. These are government insured loans that have mortgage insurance requirements each month. The mortgage insurance is tax deductible and borrowers can do a streamline refinance at any time with no pre-payment penalties.