Mortgage Refinance Programs: FHA Refinance Programs
The federal government’s Hope For Homeowner plan started Oct. 1 and a “proactive home retention plan” for Countrywide customers will begin in December. This program is slowly making its way to help homeowners as government is providing $40 billion to help homeowners to avoid foreclosure. Under this program some customers will get reduced interest rate, either temporarily or permanently. Some will have portion of their debt wiped out and some will get loan forgiveness and loan reduction. All plans will be serviced by local banks.
The Hope for Homeowner plan is supposed to help 400,000 homeowners who can’t afford their monthly payment, and who own more on their loan that their property is worth. Mortgage refinance programs encourages lenders to work with a customer directly which will allow customers to refinance into Federal Housing Administration, or FHA.program. If you are in foreclosure lender will go through steps to determine the best choice for you. In most cases your adjustable loan will become 5 year fixed mortgage loan under FHA program. Government is also considering extending 30 year fixed mortgages into 40 year mortgages. All refinances will be done through your lender.
The last option that any lender wants is debt forgiveness. In some cases banks would have to swallow losses. The lender would have to forgive all debt above 90 percent of your home value and allow homeowner to refinance into FHA secured loan. For example, your property value is $100,000 and you currently owe $125,000. That means that lender has to forgive $35,000 of debt allowing homeowner to refinance $90,000 with another lender. The loan would be insured by FHA. The homeowner who will take advantage of this program will have to share future appreciation with the government. For example, if your property is worth $100,000 and in few years you decide to sell for $120,000 the $20,000 is your profit. With that you have to give government $10,000, half of the appreciation. What to do next:
IF the smallest of these two values is greater than the original mortgage balance credit verification is required. Streamline Refinance – “Credit Qualifying”: The loan amount is calculated based on the previous formulas and qualifying requires full employment verification, credit report, and debt to income ratio compliance. Typically these loans are used when the new mortgage payment will be higher, deletion of a borrower on new mortgage, or in assumptions involving due-on-sale clauses. FHA “No Cash Out” Refinance: This regular no-cash-out loan may be used to refinance an FHA mortgage, VA mortgage, or a conventional mortgage and requires the borrower to fully qualify. Second mortgages may be included in the new loan if they are older than one year or you can prove that the funds were used solely to repair or rehabilitate the home. If not, paying off or including these loans would be considered a cash-out refinance. This loan can be used to buy out the equity of an ex-spouse provided it is documented in the divorce papers. It is still considered a no-cash-out because this equity is considered indebtedness.
IF the property was purchased less than a year ago and is not currently an FHA loan, the loan amount will be the appraised value plus closing cost, OR the original sales price plus closing cost. Which ever is less! If the home was purchased more than a year ago and does not have FHA financing, the loan amount should be calculated as the “streamline refinance with an appraisal” above. FHA “Cash Out” Refinance: This loan can be used to refinance an FHA loan, VA loan, or Conventional loan. This loan has many advantages: Max loan to value is 75% for conventional loans but FHA loans allow 85% plus a portion of the closing costs.
Learn more about Obama Mortgage Relief Plan Qualifications.
Related posts:
- Mortgage Refinance Programs: Short Refinance Program For Underwater House Owners In the year 2010, the U.S. Department of Housing and...
- Should I Refinance My Mortgage? A mortgage refinance is specifically intended to pay off your...
- On FHA 203K Rehab Loan HUD Consultant is “Big Brother” When you do an FHA 203K Loan as either a...
- Need a Fixer UPPer Loan? Then You Need a FHA 203K Loan The FHA 203K loan has been around since the 1970's...
Related posts brought to you by Yet Another Related Posts Plugin.