Smart FHA Loan Lesson 101

Why Refinance on an FHA Loan?

With an FHA loan, you can finance up to 96.5% of the home value to reduce your current rate or current mortgage term – which is a higher percentage than a conventional loan. FHA loans are often more flexible than other programs – extending funds to people who have had credit challenges and offering competitive rates for people who want to take cash out.


Why Purchase with an FHA Loan?

There are many benefits to purchasing with an FHA loan. You can take advantage of a low-fixed rate and put very little, or in some cases, no money down. With an FHA purchase, less than perfect credit is not a problem. In fact, lower credit scores or no credit scores can be approved. You might have a past bankruptcy and still qualify for an FHA loan! Additionally, a down payment can be a gift. With lower PMI than conventional loans, now might be a good time to take advantage of the benefits of purchasing with an FHA loan.


What is an FHA Streamline Refinance Program?

The Federal Housing Administration has allowed FHA streamline refinances on federally insured mortgages since the early 80’s. Given that, many FHA homeowners have utilized this program to lower their interest rate with relatively low or no costs. The FHA Streamline Refinance Program has made it easy for borrowers to save thousands of dollars on their mortgage interest. The term “streamline” simply means there is very little documentation and underwriting that needs to be performed by the lender. No appraisal & no income verification required.


Are FHA Loans Assumable?

Yes. You can assume an existing FHA-insured loan or, if you are the one deciding to sell, allow a buyer to assume yours. Assuming a loan can be very beneficial, since the process is streamlined and less expensive compared to that for a new loan. Also, assuming a loan can often result in a lower interest rate. The application process consists of a credit check - no property appraisal is required. The borrower must also demonstrate that he or she has enough income to support the mortgage loan. In this way, qualifying to assume is similar to the qualification requirements for a new mortgage loan. We are dedicated to making your FHA loan as effortless and hassle free as possible. We look forward to helping you save thousands on your Illinois FHA home mortgage.

Why Get your FHA Loan with us?

  • We Never ask for upfront fees
  • Incorporated in Illinois since 1997
  • A+ Accredited with the Better Business Bureau and a Preferred Mortgage Company
  • Complaint Free Award presented by the BBB
  • We offer Wholesale Rates that Beat the Banks

FHA Loan Benefits

  • Low down payments
    You may be able to purchase a home with as little as 3.5% down.
  • No pre-payment penalties
    You can make additional payments toward your principal balance and speed repayment of your mortgage.
  • Flexible credit–qualifying guidelines
    If you have a limited credit history or are concerned about your credit, you may still qualify for an FHA mortgage.
  • Lower out-of-pocket costs
    You may be able to save more money on out-of-pocket costs with an FHA mortgage compared to a conventional mortgage.
  • FHA loans are assumable
    Should you need to sell your home, FHA loans are an attractive selling point for potential buyers who may assume your mortgage.


Borrowers who have mortgages insured by the Federal Housing Administration (FHA) have options when it comes to refinancing. If you want to restructure your FHA home loan without all the hassles and high costs associated with a conventional refnance, you should consider an FHA streamline refinance. 

FHA streamline rates are often some of the most affordable on the market, competitive to most conventional loans. FHA streamline refinances usually have fewer steps and requirements than a conventional refinance possibly even avoiding appraisals, meaning this option can save you both time and money. 

You may be able to restructure your current FHA home loan. You could change your rate from an Adjustable Rate Mortgage (ARM) to a low Fixed Rate Mortgage ensuring a secure and consistent monthly payment for the life of your mortgage. You also may be able to reduce the term of your current mortgage, meaning you will not only save thousands of dollars over the life of your loan, but also you will pay off your mortgage even faster.

Requirements for a streamline refinance include: 

  • FHA must back your original mortgage
  • Current on mortgage payment.
  • The process will lower your monthly payments

Investment properties can also be refinanced through an FHA streamline but do require an appraisal prior to closing.

FHA "Back To Work" Program

If you've experienced any of the following financial difficulties, you may be program-eligible :

  • Pre-foreclosure sales
  • Short sales
  • Deed-in-lieu
  • Foreclosure
  • Chapter 7 bankruptcy
  • Chapter 13 bankruptcy
  • Loan modification
  • Forbearance agreements

The FHA realizes that, sometimes, credit events may be beyond your control, and that credit histories don't always reflect a person's true ability or willingness to pay on a mortgage.

For more information about FHA Loans, FHA Streamline Loans, and the FHA Back to work program CLICK HERE or call the FHA Mortgage Hotline at (888) 416-0920.

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