FHA Offers Assistance To Homeowners Troubled By Foreclosure-Refinance

By Diana Perkins on November 3, 2010, 9:26 am

Real estate is like any other investment in that you never know if it is going up or down. The current decline of real estate prices has caused a stir, but for those who purchased homes for the long term, this decline should be less of a worry. Just as the stock market goes up and down and the long term investors hold on to their portfolio waiting for a rebound, the same should be for homeowners. At least there is always the advantage that homeowners can lighten their burden by refinancing. There are many people who could benefit from these record low FHA interest rates at this time. Homeowners who have current FHA mortgages can apply for a rate reduction or rate and term reduction refinance loan.

Options

It is another option for those with underwater mortgages since they can apply for an FHA streamline refinance with no appraisal. With this loan, the new loan amount cannot exceed the original loan amount. Without an appraisal, closing costs must be paid up front or through a no-cost FHA streamline loan, but keep in mind, the no-cost streamline loan will incur a higher interest rate to cover the closing costs. The rate reduction streamline refinance must lower your monthly mortgage payment, but with these low interest rates that should not be too difficult to attain. The lender will verify income, employment and assets for closing costs. The current FHA loan must also be in good standing and at least 6 months old. The guidelines are not that difficult as is always the case with FHA loans. In these days, a loan with no appraisal is quite uncommon, except of course, for FHA.

Financial Analysts

However, some financial analysts say that programs like the FHA short refinance plan or other underwater assistance opportunities may fall flat as mortgage servicers, in some cases, will be required to reduce a homeowner’s principal amount. There have been some financial institutions who have offered earned principal forgiveness options, meaning a homeowner who continues to pay on their underwater mortgage will see a drop in their principle over time, but in terms of homeowners getting a percentage of their mortgage forgiven, this option has mostly been limited.

 

Credit Score

Payments can be lowered down if a person has a good credit score. The unemployed homeowners can even have their mortgage payments lowered to 31% for three to six months. For this one should have the unemployment benefit and one should not have more than three missed mortgage payments. To qualify for this plan the loans should also be originated before January 1, 2009 and the homeowners should get his principal balance reduced to 10%. Even incentives are offered to the mortgage lenders who encourage the borrowers to reduce their principal balance.

Related posts:

1. FHA Refinancing Help Might Save Some More Home Foreclosures
2. FHA provides refinance help to underwater homeowners
3. Be Smart If You Are Thinking Of Refinancing: Refinance Rates Are Good
4. Refinance Rates: Be Sure To Catch Them Before The Market Goes Up
5. Refinance Rates May Help Homeowners Out Of Debt At A Critical Time