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FHA Secure Refinance
New FHA home mortgage refinance loans enable homeowners with bad credit to qualify for fixed rate refinancing up to 97% loan to value. The FHA secure refinance loans provide refinance opportunities to homeowners who have been late on their mortgage payment since their rate reset. Consumers across the country are flocking to the affordable home loans that help borrowers escape from their escalating adjustable rate mortgages.
In a recent speech, George Bush discussed a new government initiative designed to offer affordable fixed rate solutions for homeowners who have high rate ARMs. To prevent future foreclosures, the government is offering a new FHA loan program. "FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery.
The FHA Secure plan is a good way of avoiding foreclosure and refinancing your ARM (adjustable rate mortgage). The plan provides fixed rate refinancing for families with strong credit histories who are now in default as a result of their mortgage payments now being unaffordable. To qualify:
- You must have good payment history before the teaser rates expired and your loan reset.
- The reset of the interest rates on your loan must occur between June 2005 and December 2008.
- You must have 3% cash or equity in your home. Example: if your house is appraised at $100,000, you must have an outstanding mortgage balance of $97,000 or less.
- You must have a sustained history of employment and sufficient income to make the mortgage payment.
The HUD newsletter dated 8/31/07 indicates that the FHA Secure initiative will operate under the same safe guidelines as the FHA's existing mortgage insurance program without affecting FHA's financial health. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium, which offsets the risk to FHA's insurance fund at no cost to the taxpayer. It also indicates that FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay (i.e., riskier borrowers pay more). This common sense, risk-based pricing structure will begin on January 1, 2008.
The FHA Secure Plan is Only Temporary
A Google News article on PR-GB.COM, entitled Is Your ARM Adjusting and Your Mortgage Rates Going Through the Roof? - FHA to the Rescue!, reports that the FHASecure plan is a temporary program, and applications must be signed no later than December 31, 2008. Fixed rate home loans are very hard to come by these days, especially if you have bad credit. So, if you're interested in taking advantage of these government home loans, you'd better talk to a lender ASAP.
- Article written by Maria Ny for Nationwide Mortgage Loans.
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