The FHA refinancing regulations are modified in order to clarify certain aspects of FHA refinance rules. It is also to tighten up those regulations in other areas. The few changes are the modifications to streamline refinance program, which is a noncredit qualifying refinancing loan.
The availability of refinancing tempts many borrowers to apply for FHA insured mortgage. Individuals opt for an adjustable-rate loan, and refinance it later with a better interest rate. However, the new rules limit the time, at which you can avail this facility.
Mandatory Changes in Guidelines
Before a borrower can apply for refinancing, it is necessary to own the property in stipulated time and make the required payments. According to the new rules, it is mandatory for the borrower to make a minimum of six payments against the mortgage being refinanced.
As per the new rules, one has to wait for a minimum of 210 days from the loan closing date, before you can request for refinance. Apart from these, the borrowers no longer have to verify employment and income for a streamline refinance transactions. This has changed the process for the sellers, and does not directly affect the borrower.
FICO Scores under New Guidelines
The new rules have assured strong premium flow of revenue, and have eliminated the unnecessary credit risk. The requirements for the FHA loans concerning the FICO score requirements as well as down payment has also changed. The new borrowers must have a minimum average rating of 580, for availing the benefit of paying a down payment of 3.5 percent.
New borrowers who have a FICO score of less than 580 have to put a down payment of at least 10 percent. This reduces the risk for the lenders, and provides access for borrowers who have performed well in the past. However, borrowers with a score of exactly 580, still find it difficult to get the loan, despite meeting all the requirements.
The minimum FICO score should be 620 to qualify for the FHA loan. In case the score is not sufficient, you can seek advice from the counselors. The credit and house counseling help the borrowers take appropriate steps regarding credit issues. This might take time, but time invested in raising the credit scores with the help of an FHA approved counselor, definitely aids in accomplishing your dream of owning a house. You can learn more by contacting the FHA counselors for assistance.
