FHA Refinance of Borrowers in Negative Equity Positions

Here it is at last, your chance to refinance your underwater mortgage. The long-awaited FHA rules that will allow homeowners that are underwater to refinance their homes.

If your house is underwater and your interest rate is above 6 percent, you should definitely consider this refinance opportunity when it becomes available. Even if you have a good interest rate, the write-down of your first and/or second mortgage may make this deal worth considering.

You must be current on your mortgage to qualify for this FHA refinance opportunity. Also your lender or investor must be willing to write off at least 10 percent of the original first lien on the mortgage. The new program will be available starting September 7, 2010 and you will have until December 31, 2012 to finalize a refinance deal.

Your participation in this refinance program must be voluntary and you must have the consent of lien holders. In other words, if your lender refuses to participate, you won’t be able to take advantage of this refinance program.

For your loan to qualify, you must meet these conditions:
–Your mortgage must be in a negative equity position;
–You must be current on the mortgage to be refinanced;
–You must occupy the subject property (1-4 units) as your primary residence;
–You must qualify for the new loan under standard FHA underwriting and your FICO score must be greater than or equal to 500;
–Your existing loan must not be a FHA-insured loan;
–The existing first lien holder must write off at least 10 percent of the unpaid principal balance;
–The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent;
–If you have other subordinate mortgages (such as an equity line) they must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent;
–Your total monthly mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income and total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income; and
–You cannot use the new FHA mortgage to pay off existing debt obligations in order to qualify for the new loan.

If you’re already undergone a loan modification, you may still qualify for these new FHA loans. Anyone whose loan was modified under the Making Home Affordable Modification Program (HAMP) may still be eligible beginning the month following the date the modification was permanent. If you were modified using a non-HAMP loan, you must make three on time monthly payments on the new modified mortgage and be current on the loan.

Need more information on this refi program or other programs contact:

Val Hall

Vhall@embracehomeloans.com

(703) 309-2005

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Take care,

Chuck

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Leesburg, Mclean and Loudoun County area Real Estate needs!

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