• FHA allows you to access some of your home's equity with a cash-out refinance.$100 house image by Paul Heasman from Fotolia.com
  
  The Federal Housing Administration offers some of the most accessible refinance programs to low- and moderate-income homeowners and those with credit challenges. A refinance transaction pays off an existing mortgage with the proceeds from a new home loan. FHA's three refinance options allow you to convert equity into cash, change your loan's terms and obtain a lower monthly payment. FHA insures mortgages, reimbursing lenders' losses if borrowers default.
  
  

Cashing Out

• Cash-out transactions are the most stringent of FHA-insured refinances. Lenders must be cautious in approving cash-outs because they generally lead to a higher monthly payment. In a cash-out, the homeowner borrows against their home's equity. Borrowers use the proceeds for such purposes as: extra cash, debt repayment or consolidation, home improvement or emergencies. A cash-out presents increased risk for the lender, especially if the borrower has not experienced an increase in income. Their new loan amount may not exceed 85 percent of their home's value---as determined by an FHA appraisal.
  
  

Getting Better Terms

• FHA's no-cash-out refinance, also known as a rate and term transaction, allows borrowers to replace their existing loan with an entirely new FHA-insured loan that has a different interest rate, repayment term and program features. For instance, a borrower with a 15-year, fixed-interest rate loan at 5 percent, can refinance into a 30-year, fixed-rate mortgage with the same interest rate and get lower payments because the loan is amortized over a longer period. Rate and term refinances also enable you to "buy out" a spouse if you are divorcing, for instance. You pay them to surrender title to your property and finance the amount into your new loan. FHA allows you to borrow up to 97.75 percent of your home's value.
  
  

Streamline

• FHA's streamline refinance program is unique in that it allows you to simply change the terms of your existing loan, while honoring the repayment term already completed. For example,you can streamline refinance your 30-year FHA-insured mortgage that you've had for 10 years, obtain better loan terms that will lower your payment and still have only 20 years left under the new mortgage.
  
  "Streamline" refers to the minimal amount of paperwork and credit qualifying required to obtain this loan. Appraisals are optional and the borrower may only obtain one if they will experience a benefit of reduced monthly payments, a fixed interest rate or overall improved loan conditions. Streamlines can only be done when the existing mortgage is already FHA-insured. You can refinance up to 97.75 percent of your home's value.