Do You Qualify For The New FHA Short Refinance Program?
The Federal Housing Administration (FHA) which governs the “Home Affordable Refinance Program” or HARP has announced a new short refinance plan for rescuing underwater homeowners. Here is some vital information on the latest federal government initiative which borrowers might find useful in their effort to save their homes.
Underwater homeowners can now avail a FHA short refinance loan for addressing their mortgage debt related problems. As per the new program borrowers, who have been affected by the housing crisis but still remained current on their monthly mortgage payments despite decline in their home values, would be eligible for refinancing their homes to drastically reduced mortgage refinance rates. The new FHA plan is bound to benefit thousands of home makers with negative home equities or even upside down home mortgages since it encourages principal write-downs for borrowers who are responsible.
Even thought the FHA refinance program is slated to assist 3 to 4 million struggling homeowners, who have faced with financial hardship situations across United States, experts express fears that the requirements for the government scheme are extremely stringent and therefore, may not be helpful to homeowners who are actually underwater. Bur even the HARP was severely criticized when it was initiated way back in 2009, but still it successfully managed to help millions of borrowers in saving their homes. The HARP results should invariably put all such speculations to rest.
Nevertheless, if your existing home mortgages are underwater, you could apply for the FHA home refinance plan by satisfying a few basic requirements that are mentioned below.
- Refinance loan applicants need to have negative home equity or upside down mortgages which means that you should owe more on your present home than its current market value.
- Borrowers have to be current in paying their monthly mortgage payments on existing home mortgage loans
- Just as required in the home affordable refinance program (HARP) eligibility conditions, the homes to be refinanced need to be primary residences.
- Only homeowners who have a credit score of 500 or above can qualify for a FHA refinance home loan. Besides, the borrower needs to confirm to the standard FHA underwriting procedures.
- To be eligible for the FHA insured home mortgage refinance loan, the loan-to-value ratio (LTV) of the borrower should not exceed 97.5 %. And in case, homeowners have two mortgages already, the combined LTV value needs to be fewer than 115%.
- An additional requirement for the FHA home refinance states that the borrower’s present mortgage servicer has to agree for writing off 10 % of the unpaid home mortgage loan balance. In case the borrower already has two mortgages with separate lenders, the second lender needs to give his agreement for remaining in the second lien position.
- Borrowers who presently have an FHA-insured loan cannot refinance their homes through the new plan.
To get more useful information on the FHA refinance program and Second Mortgage Under Obama Stimulus Plan, it’s strongly recommended to utilize the professional services offered by reputed online service providers like LoansStore.
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