Key Takeaways
- When can I refinance my FHA loan depends on the type of refinance you choose
- You must wait at least 210 days for an FHA Streamline refinance
- Cash-out FHA refinances usually require 12 months of ownership
- You must be current on mortgage payments to qualify
- Your new loan must meet FHA and lender requirements
- Refinancing could save you money or help you switch loan types
- A mortgage expert can help you decide the best time to refinance
What Does It Mean to Refinance an FHA Loan
Before we look at when you can refinance your FHA loan, it helps to understand what refinancingmeans. Refinancing is when you take out a new loan to replace your current one. Most people do this to get a lower interest rate, change their loan terms, or switch to a different type of mortgage.
If you have an FHA loan, you might refinance into another FHA loanor into a conventional loanif your financial situation has improved.
When Can I Refinance My FHA Loan With a Streamline Option
The FHA Streamline refinanceis a popular choice because it has fewer steps and less paperwork. But there are timing rules you need to follow. You must wait at least 210 days from the date your last loan closed. You also need to have made at least six on-time monthly payments.
In short, if you got your FHA loanless than seven months ago or have missed payments, you will need to wait. Once you meet the time and payment requirements, a Streamline refinance could help lower your rate or monthly payment without needing a new appraisal or income check.
When Can I Refinance My FHA Loan With Cash-Out
A cash-out refinance lets you tap into your home equity and take out cash for big expenses like home improvements or debt payoff. To qualify for this type of FHA refinance, you typically need to have lived in the home for at least 12 months.
You must also have made all mortgage payments on time for the past year. Cash-out refinancing has stricter rules because you are borrowing more than just your remaining loan balance. You will also need a new appraisal to confirm the home’s current value.
Can I Refinance My FHA Loan Into a Conventional Mortgage
Yes, and doing this might help you avoid mortgage insurance in the long run. Refinancing from an FHA loan into a conventional mortgage is called an FHA-to-conventional refinance. This option becomes more appealing when your home has built up enough equity and your credit score has improved.
The timeline for this type of refinance depends on your lender’s rules, not the FHA. If you have at least 20 percent equity in your home, you could skip private mortgage insurance and lower your monthly costs.
What Else Affects the Timing for Refinancing an FHA Loan
Even if you meet the basic time and payment rules, other factors affect when you can refinance your FHA loan. These include:
- Your current interest rate
- Your home equity level
- Your credit score and debt
- Market interest rate trends
- How long you plan to stay in the home
The best time to refinance is when it helps you meet a specific goal. That might be lowering your payment, removing mortgage insurance, or accessing home equity.
How to Start the FHA Refinance Process
Once you decide the time is right, you will need to:
- Contact a lender to explore refinance options
- Gather documents like pay stubs and tax returns
- Compare current rates and loan types
- Complete a loan application and review closing costs
If you are unsure where to begin, working with a trusted mortgage team can make the process easier.
Still wondering, When can I refinance my FHA loan? The Molly Dean Teamis ready to help you explore your options. Reach out todayfor expert guidance and a personalized refinance strategy.
Molly Dean
Molly Dean is consistently ranked as one of the top loan officers in the nation! Her knowledge of products and programs allows her the ability to help her borrowers find the program that best fits their individual needs.
Molly understands that when shopping for a mortgage professional, you need an individual and a team you can rely on. Molly’s goal is to help you in a fast and friendly manner.
Molly Dean and her team have a combined experience of 50+ years. Molly and her team work endlessly to make the purchase of a home as smooth as possible from start to finish. Molly and her team specialize in Conventional, FHA, VA, USDA, 203K, and Reverse loans.
