A review of the FHA updated guidelines to the short refinance modification for struggling homeowners who are current but have lost value in their home.With the ever increasing rates of foreclosures and homeowners walking away from their homes, the government has announced a revision to the short refinance modification. Announced back in March 2009 the Home Affordable Modification Program has helped thousands of struggling home owners to stay in their home. However, there is still certain areas of the country that has seen such a devaluation of their property that these homeowners are choosing to walk away. Below are some of the basic requirements for this new short refinance modification.
Must be current on your mortgage
Have a non FHA government mortgage loan
Must be your primary residence
A minimum credit score of 500
First mortgage lien must be willing to write of 10% of mortgage principal reduction
Loan to value ratio should be no more than 97.75 %
2nd lien’s must be willing to agree to full and or partial write off
This new short refinance will only be available to those homeowners whose lenders are willing to participate and are in the targeted areas. IF you cannot keep your home and refinancing is not an option you may want to consider applying for a loan modification. In some cases, lender’s may reduce principal as part of the loan modification. However, it is very far and it is not a common practice with lenders, but you may get some assistance by exploring your options and knowing your rights.
If you are a homeowner who currently has a FHA mortgage which is a government insured loan, you may just be a great candidate for an FHA streamline refinance and benefit from today’s low home loan rates. The term “Streamline” merely means when it comes to lending, is very little paperwork to give the mortgage company. Due to little documentation, it allows the borrower a faster and easier mortgage closing.An FHA streamline refinance more often than not has the following traits:o No minimum credit score requirements.
o No asset documentation such as bank statements, retirement accounts, etc.
o An Appraisal may not be necessary. If an appraisal is required for an FHA Streamline, the maximum loan is restricted to 97.75%. If an appraisal is not used, there is not a maximum loan restriction.
o Upfront mortgage insurance is decreased to 1.5% of the base loan amount (instead of 1.75% for a normal FHA refinance which is not streamlined).
o Any cash from proceeds to the borrower is restricted to $500.Here are some simple rules for homeowners to know when it comes to FHA refinancing:o The mortgage to be paid off must be an FHA insured mortgage.
o The borrower can not have had a 30 day or greater mortgage late payment in the previous 12 months.
o Non-occupant co-borrowers are not allowed.
o The new loan amount is subject to FHA maximum loan limits in your geographical area.
o If a property has been converted to an investment property it can still qualify for a FHA streamline refinance if the existing mortgage is an FHA loan.Now, to make sure you get your FHA refinance done correctly, use a mortgage company or loan officer whose company is HUD approved. The benefit is you get to use a company that is an endorsed HUD approved lender and that generally mean they have their own “in-house” FHA underwriters. This speeds up the time for approval and closing. Timing is crucial in today’s market as rate move up and down quickly.If you’re interested in an FHA Streamline refinance loan and still have questions about how it may work for your individual situation or what the maximum loan limits are in your state, inquire below. To get started, you will need to gather the following information for a loan officer to review. The information will normally consist of the following:o Your Home’s Property address
o Estimated property taxes and home owners insurance.
o Original FHA loan balance from when you got the mortgage.
o Existing FHA loan balance.
o Estimated home value (appraisal may not be required).
Over the years of originating home equity loans, I have formulated some key theories about what consumers want and benefit from with their second mortgages. My theories are based on feed back from my clients, and noted observations over the last few years. With the real estate boom in the rear-view mirror, it is important to take a moment and consider the driving forces debt relief, FHA refinance and home equity lending. Let us take a few moments and explore the core benefits of person taking out a secure loan with their home’s equity.1. Quicker Access to Cash: Bottom line, people want cash available when they need it, whether it for purchasing a car, a second home or refinancing their loans. This explains the increased popularity for home equity credit lines.2. Consolidate Debt: American like to spend with credit, and credit card debt can hinder finances quickly. Fortunately homeowners have figured out how effective debt consolidation can be as demonstrated with many home equity loans. All too often I have seen people abuse credit and it gets them into trouble. No big screen TV is worth the headaches from over-extended debt.3. Affordable Monthly Payments: Before recommending a specific home equity loan to my clients, I want to make sure that they can afford the payment liabilities for their new venture. I have learned how important it is for homeowners to set budget with and stick to it.4. Tax Deductibility: Who wants to pay more taxed than they to. The US government clearly encourages and rewards homeownership. Deducting mortgage interest could be considered wide.5. Interest Rate Bragging Rights: Everyone loves to talk interest rates at the water cooler or party. Some people stretch the truth regarding their interest rates, and some people flat out lie about their mortgages.
The refinancing of your home mortgage isn’t something most people find as fantastic or interesting. Most people merely opt for the best solution given so that they can get on with the process of organizing and finishing the home loan. Well, FHA Refinance Mortgage loans do that for borrowers. FHA Refinance Home Loans will give you a solution that is almost perfect to your particular home loan needs and will give you exactly what you’re looking for when you want it.FHA, (Federal Housing Administration) can provide all the required help so you are able to refinance your current home mortgage. This type of loan has specific benefits and guarantees the lender in case of default. As a result, mortgage companies and lenders can offer you a better mortgage rate than if it was not government insured.Typically, the loans are made under conservative underwriting guidelines to borrowers who have an established credit payment history, and in some situations those who are not your average borrowers are also granted approval for an FHA Loan. This can include borrowers who have had past credit issues but have not filed bankruptcy in the previous five years, as well as applicants with one income, or who have never had any history of credit.An FHA refinance loan can assist you with the funds you need to make the type of repairs necessary for your home. It can also help you with the money you need to expand your home or make renovations. For there type of rehab loans, it will be required that all repairs are approved are completed in a cost and energy efficient manner. This will make certain that natural resources are preserved while the construction is being done and later.So, why choose an FHA Refinance Home Loans over the conventional mortgages?The reason is the fact that an FHA Refinance Home Loan offers you a way to do things that many typical mortgage do not allow.FHA loans guarantee repayment for lendersA 3% down payment is all that is required to purchase a home; even the closing costs can be financed into the mortgage.You can purchase a home that is in need of rehab and finance the repair costs into the new mortgage.An FHA loan is also available to purchase manufactured housing or mobile homesThere you have it. Now that you probably agree let’s understand something. The FHA doesn’t do the lending themselves. Rather they guarantee your loan to the lenders who are willing to get you approved. In return, lenders are sure that their money will be returned to them, even in the event of borrower default.
In 2009, the mortgage bailouts continued with a new home refinancing program designed to aid struggling homeowners who have not been able to qualify for traditional refinance loans due to declining property values. Unfortunately, the recent housing crisis eroded the home equity for millions of homeowners. The Home Affordable Refinance Programs rolled out new government refinancing options that became available to a large sector of borrowers. HARP is part of the Obama mortgage plan that helps Americans reduce their loan payments or alter their current mortgage to be able to stay in their home and avoid foreclosure.This latest government refinance initiative offers unique advantages over conventional home refinancing because it requires no equity. In fact the home values have depreciated so significantly that the latest Obama mortgage plan enables borrowers to refinance their mortgage up to 125% of the property’s present value. The 125 loan plan aims to refinance borrowers into lower mortgage payments.HARP Loan Qualifications: The Home Affordable Refinance Program allows a homeowner to refinance their current mortgage as long as the home is used for primary residency. The homeowner must be current (less than 30 days late in the last 12 months) with their existing mortgage and the mortgage must be insured by one of the mortgage companies that are backed by the government (Fannie Mae or Freddie Mac). The home must have been purchased before or on January 1, 2009 to qualify. The home’s value must also have dropped causing the homeowner to not be able to refinance using conventional loans.HARP loan limits have been set at $417,000 for the time being. There is a vast group of Americans that owe more on their mortgage than their house value is worth after real estate values dropped. Another group of Americans are not “upside down” in their mortgage, but they cannot refinance conventionally because refinancing 80% (% most lenders use) of the home’s current value does not allow them to even pay off the existing mortgage.The Home Affordable Refinance Program may finally be the solution that many Americans have been looking for. Past government refinance plans like Hope for Homeowners and FHASecure were unable to help the average borrower refinance because they could not qualify due to lending program glitches. FHA refinance may still be a good fit for borrowers who have credit scores below a 620, but the borrower must be able to display compensating factors. Like conventional and FHA mortgage loans, pay stubs are required, and borrowers must be able to document that they have the ability to afford the new loan payments.