There are many FHA home loans that offer benefits for both refinancing and buying a home. Years ago, FHA mortgages were only considered for first time homebuyers. While FHA loans are great for 1st time homebuyers, they are also good mortgages for refinancing and purchasing.

One notable feature of a FHA mortgage is that they are available for borrowers with less than perfect credit. FHA guidelines do not use credit scores as the primary function for underwriting like most conventional lenders do when considering qualifications. Consumers with low fico scores, even past bankruptcies being reported by credit repositories, like Tran Union, Equifax, and Experian.

Most FHA lenders underwrite and approve home loans based on debt to income ratio and the proposed borrowers ability to repay the mortgage. Another benefit for government lending is that lenders and brokers assume very litle risk because our HUD insures FHA loans against defaults.

With FHA loans, you will be obligated to document your income, employment and provide letters of explanation regarding any late payments and derogatory credit. If you need cash out, the FHA lender will want a letter explaining how you intend to use the cash.

Any way you look at it FHA loans have become the recommended option for borrowers with no equity to refinance. In addition homeowners with poor credit scores will be advised to consider FHA mortgage loans because there are very little subprime options available today and the few non-prime options out there typically carry high rates with excessive pre- payment penalties. FHA mortgages don't have pre-pay's and the mortgage rates with FHA remain low compared to subprime or non-conforming rates.