FHA short refinance program strives to help struggling homeowners
FHA has decided to introduce a short refinance program to help the struggling homeowners. This program has been specially designed for those individuals who are going through home mortgage problems. Glance through the article to gather information on FHA short refinance program.
FHA Short refinance – A new hope for the struggling homeowners
Obama administration has introduced FHA short refinance program to assist the individuals who are finding it difficult to make payments on their home mortgage loans. The goal of this program is to help the homeowners who have been severely affected by the downturn in the housing market but are somehow current on their home loan payments.
According to the new short refinance program, the struggling homeowners will be able to refinance their mortgages at low interest rates. However, this program is primarily available to the underwater homeowners. The short refinance program is expected to help nearly 4 million underwater homeowners going through financial difficulties in USA.
A lot of struggling homeowners have failed to qualify for Home Affordable Refinance Program (HARP) due to various reasons. Some of the homeowners have complained that the eligibility criteria for HARP is very strict. Similar complaints have also been made against the short refinance program by the mortgage experts. Nevertheless, the homeowners will be able to qualify for this program by fulfilling the following requirements:
Homeowners are making timely payments on their home mortgage loans. They should be making the monthly payments on their home loans on time.
Homeowners need to have negative equity in their homes. This primarily means that the fair market value of the house is less than the mortgage amount. For example, if the market value of a house is $250,000 and the total amount owed on mortgage is $300,000, then the house has $50,000 negative equity.
The property should be the primary residence of the homeowner. In short, the homeowner should be living in the home.
Homeowners need to have a decent credit score. Homeowners need to have minimum 500 credit score to be eligible for the short refinance program. Apart from that, homeowners will have to fulfill the general FHA underwriting guidelines.
The loan-to-value ratio must be below 97.5%. If the homeowners have 2 mortgages, then the overall loan-to-value ration should be less than 115%.
Homeowners having FHA insured loan will not be eligible for the new short refinance program.
Last but not the least, the mortgage servicer of the homeowner should agree to write off around 10% of the outstanding balance on the home loan. If the homeowner has 2 mortgages, then the second mortgage lender needs to give his consent for the second lien. The second mortgage lenders will get special incentives for giving their consents from the US treasury.
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