How to Stop Foreclosure With a FHA Refinance
- 1). Meet eligibility requirements. FHA refinances have more lenient requirements than conventional options. For example, if you are struggling with credit challenges, an FHA refinance allows a credit score as low as 620. However, with FHA products, you can't be "underwater" on your mortgage. This means you can't owe more than the home's market value.
- 2). Compare FHA mortgage rates. FHA mortgages aren't just available with your current lender; other lenders offer this product too. Compare interest rates with tools such as Bankrate.com. Your interest rate will vary, based on your credit score. Most lenders use risk-based lending. The lower your credit score, the higher the interest rate.
- 3). Fill out a loan application. Contact the lender you have chosen and complete an FHA loan application. If you are refinancing with your existing lender, the company may have a streamlined process that require less documentation. At a minimum, the lender will require recent pay stubs and bank statements.
- 4). Schedule a home appraisal. Most FHA lenders require an appraisal. The cost for an FHA appraisal is usually about $400. Appraisal costs are added to closing costs, in most cases. The lender will give you information for approved appraisers.
- 5). Sign loan paperwork. After approving the loan, the lender will set up a day to sign loan documents. Review the documents to ensure the agreement, such as interest rate and loan term, are correct. Most loans fund within three business days.
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