How to Refinance Through HUD

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The Department of Housing and Urban Development, referred to as HUD, provides a number of beneficial programs for U.S. residents who may require additional support with regards to housing and accommodation. In fact, there are currently four programs in existence which HUD has co-developed with the Federal Housing Administration that allow homeowners to refinance their property on generous terms. These include the FHA Rehab Mortgage opportunity, as well as the FHA Cash-Out, Simple and Streamlined Refinance Programs.

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  • Refinancing through HUD can prove to be immensely valuable for many homeowners. HUD currently collaborates with the FHA on a variety of refinancing options, including Rehab Mortgage programs for individuals seeking to refurbish their property as well as more traditional refinancing programs.

The Basics of HUD Refinance Opportunities

Regardless of which specific refinancing program an individual may be applying for, the first step on the path to completing this process is confirming that the applicant meets the eligibility requirements established by the government. These are included as part of the general refinancing application provided by HUD and the FHA.

In order to get started with the process, the applicant must provide a variety of information, including the address of all residences over the past two years, the names and addresses of all employers and gross income received over the past two years, all W-2s from the same time period, as well as relevant income tax forms. Without this information, the FHA application cannot proceed further.

As mentioned in the introduction, the FHA offers a variety of refinancing programs to lenders, each of which has its own distinct advantages. The Rehab Mortgage program allows individuals to borrow money not only to finance a mortgage but also to refurbish and restore their property. The Cash-Out option involves taking out a second mortgage for more than is currently owed on the property, putting cash "in-hand" for borrowers. A Streamlined refinance is considered the most expedited process, while the Simple refinancing program is most similar to those found in traditional banks.

Exploring the Automatic Underwriting System

In order to expedite the process and ensure that the large number of applicants applying for various HUD and FHA programs receive the assistance they require, an automatic underwriting system quickly examines an applicant's pertinent financial information in order to determine what level of credit risk they pose to the lender. During this underwriting process, a variety of parameters will be assessed, such as an applicant's loan-to-value ratio.

Specific refinancing options may have unique requirements. For example, in order to qualify for the FHA Short Refinance program, an applicant must live in the property as their primary residence and must be current on all payments. Given the fact that each refinancing program features specific eligibility parameters, it is in the best interest of the applicant to speak directly with a member of the refinancing team in order to ensure that they will not be denied funds due to a technical oversight.

Identifying the Right Lender

Since mortgage lenders are not required to collaborate in all the various FHA refinancing programs, applicants should speak with their preferred lender prior to completing the application. This ensures that they will actually be able to initiate the refinancing process, if approved. In a situation where an individual has applied for refinancing via the FHA, the loan provider used by the applicant must first be approved by either Freddie Mac or Fannie Mae. Failure to do so could void eligibility.

Moving Forward With the Refinance

Once an eligible lender has been found, the applicant should take their time to fully compare rates and ensure that they are receiving the best possible terms available. Just because lenders must meet a series of eligibility requirements does not mean that they all present the same terms to borrowers. Finding the right lender for your refinancing will ensure that you have the best possible opportunities available to you.

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About the Author

Ryan Cockerham is a nationally recognized author specializing in all things innovation, business and creativity. His work has served the business, nonprofit and political community. Ryan's work has been featured at Zacks Investment Research, SFGate Home Guides, Bloomberg, HuffPost and more.

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