How to Refinance a NIFA Mortgage

An NIFA mortgage is a mortgage for home owners in Nebraska. The Nebraska Investment Finance Authority (NIFA) loans are insured by the Federal Housing Administration (FHA), the Veteran’s Administration (VA), the United States Department of Agriculture and Private Mortgage Insurances. NIFA interest rates are usually lower and the fees charged to manage the mortgage are also lower than most lenders offer. The mortgages as a general rule are 30 year fixed interest rate loans. If you want to refinance through this Authority, you will follow much the same process as you did when you initially qualified for a mortgage with them. The instructions below are moderately challenging, but you can do it. Here is a list of the things you need as you work your way through the steps:

• Prior tax year IRS return and supporting documents
• NIFA mortgage papers
• Most recent mortgage statement
• Insurance papers and property tax paper

Step 1: You obtain a mortgage with NIFA when you are a first time home buyer. If you are not part of the program you cannot refinance into the program. The only exception is for construction loans. If you made application for a loan to build a new home and you financed for 30 years at a fixed rate of interest through NIFA you will be allowed to refinance that loan. You will have made the arrangements to do so when you closed on the construction loan.

Step 2: Make sure you have all the documents on your NIFA mortgage. Read over them carefully. This is a mortgage that has a lot more advantages than a non-NIFA mortgage. They have a lower rate of interest and the fees are reduced as part of the social service program. If you have to refinance, make sure that you have a good reason for doing so. The advantages of this loan program will be a lot to give up.

Step 3: Make sure that you meet the eligibility requirements of the new lender. You will have to have a certain income, a minimum equity amount in the property, and you will be limited to the amount that you can refinance. The lender will not approve unless you fall within certain debt-to-income guidelines. Your debt-to-income ratio can be determined by totaling your monthly expenses and your monthly income. Divide the expenses by the income to get your debt-to-income ratio. Another ratio the lender will figure is your loan-to-value ratio. This is your total mortgage debt divided by the total value of the home. The standard most lenders look for are a debt-to-income percentage below 45% and a loan-to-value percentage below 90%. If you believe that you still qualify for a refinance, continue to step 4.

Step 4: Obtain a copy of your credit report from all the bureaus or select one of the three. You will need a credit score of 720 or better to qualify for a loan comparable to NIFA. You can go on line to one of several websites to get a copy of your report. You can obtain one free report each year.

Step 5: Start calling lender to find out the rates of interest and the fees associated with the refinance loan. Make application to at least three different lenders and when they have responded to your application compare the rates and fees of each lender. Make sure that you have full disclosure from the lender about all fees associated with their mortgage offer. Some of the lenders have the information in written form and some are available on line. You just need to ensure that you make the comparison for each lender quote.

Step 6: Will you benefit from the refinance? One benefit is a lower interest rate. Another is a lower monthly payment amount. You can even change the length of payment of your mortgage when you refinance. You can change from a 30 year fixed rate of interest to a 15 year fixed rate of interest or any other loan forms that you qualify for. After you have weighed all the options and you have selected the lender who offers you the most for your money, make an appointment with the lender to finalize the loan paperwork.