The Federal Housing Authority (FHA) provides insurance to some lenders to increase the likelihood that those lenders will offer favorable mortgage rates and fees to their consumers. This insurance then gives lenders peace of mind that, if the mortgages do default, the government will cover the expense. If you had trouble earlier with a overwhelming mortgage and received a loan modification on your FHA-insured mortgage, it is possible to refinance that loan again. However, you will lose the previous rate and payment you secured through the FHA.
Refinancing a Modified Mortgage
It is always possible to refinance a mortgage on your own property. You own the title to the land and the home, you have control over your finances, and you alone decide when and how the debts on your home will be structured. If you received a loan modification from the FHA, you can refinance your mortgage again. However, to have received that loan modification, you likely had problems in the past with the home being "underwater," or with the cost being too high. Therefore, it is important to think carefully about restructuring an FHA-approved modification.
Refinancing with the Same Lender
Remember that the FHA is not a mortgage lender; rather, it's a government agency that oversees certain aspects of mortgage lending. You do not receive funds from the FHA; the FHA insures the lender that provides you with funds for a mortgage refinance. Your FHA loan modification went through a particular lender (in all likelihood, your original mortgage lender). If you choose to refinance with your original lender, you might not be able to secure an FHA-insured refinance.
Refinancing with Other Lenders
Your original mortgage lender, who is likely servicing your FHA modified loan, may not be able to qualify you for a new refinance. If this is the case, you need to seek out other lenders and brokers who might be able to refinance your mortgage loan. Remember, however, that if your mortgage is still "underwater," or if your home value is less than the loan balance, you will find it quite difficult to find a competitive mortgage rate and payment on a refinance.
If you cannot find a refinance option, it is possible to find other avenues for financing. One of those options is the hard money lender -- a financing professional who specializes in high-risk loans. These lenders, however, tend to charge rather large fees and rates on their loans due to the risk of the deal. In a tight financing squeeze, weigh all the pros and cons of all mortgage refinancing options -- including the option to remain in your modified FHA mortgage.
Based in Eugene, Ore., Duncan Jenkins has been writing finance-related articles since 2008. His specialties include personal finance advice, mortgage/equity loans and credit management. Jenkins obtained his bachelor's degree in English from Clark University.