A refinance transaction is used to pay off the existing debt or to withdraw equity from the Property with the proceeds of a new Mortgage for a Borrower with legal title to the subject Property.
FHA insures several different types of refinance transactions:
1. Cash-out refinances are designed to pull equity out of the Property.
2. No cash-out refinances of FHA-insured and non FHA-insured Mortgages are designed to pay existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance.
3. Refinances for rehabilitation or repair (Section 203(k)).
4. Refinancing of an Existing Section 235 Mortgage.
For additional information see Handbook 4000.1 II.A.8.d; II.A.1.b.i(C) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh