FHA Home Refinance Loans can be considered either
through FHA Refinance for Borrowers with Negative Equity or through the FHA
Streamline refinance program. FHA (Federal Housing Administration) is a part of
the National Housing Act of 1934. This government agency is responsible for
insuring loans made by banks and other private lenders for home building and
home buying. The lenient eligibility guidelines, which apply to FHA Home
Refinance Loans, seem to be a crowd puller for now.
FHA Streamline refinance program is meant
for catering to the mortgage situation of the existing FHA customers. With an
attractive refinancing option through this FHA Home Mortgage Refinance Plan, a substantially
reduced mortgage rate could be hoped for. The ‘streamline’ part implies that
the documentation is comparatively less. One can safely decipher that
appraisals won’t be so necessary. This plan is quite helpful when facing a
financial setback, whether it is in lieu of a housing crisis or whether it is
about simply striving to improve the monthly expense outlay. To qualify for FHA streamline refinance loan
rates one might have to ensure a few applicable conditions. To refinance though
this plan, a mortgage must already be FHA insured. The borrower should not have
allowed payment lapse on this mortgage, to qualify for this program. A lender
participating in this program would have to be in agreement to the lowering of
borrower's monthly principal and interest payments, or, under certain
circumstances, the conversion of an adjustable rate mortgage (ARM) to a
fixed-rate mortgage. With the streamline refinance process, cash out
refinancing is not possible.
FHA Refinance for Borrowers with Negative
Equity or FHA Short Refinance is meant for homeowners who are regular with mortgage
payments but owe more than the value of their home. For such situations FHA
Short Refinance may be an option that a lender will consider. FHA Short
Refinance has been put forth to help homeowners refinance into more affordable,
more secure FHA-insured mortgage. If the current lender agrees to participate
in this refinance, the loan amount would be reduced to 97.75 percent of a
home's current value. The eligibility criteria for FHA Short Refinance states
that the mortgage should not be owned or guaranteed by FHA, VA or USDA. It
works for a borrower when the loan amount is more than what the home is worth
and when the said home is the primary residence. The standard underwriting
requirements apply for eligibility. The total debt amount shouldn’t be above 50
percent of a borrower’s salary. And a borrower shouldn’t have been convicted of
felony larceny, theft, fraud, forgery, money laundering or tax evasion in
connection with a mortgage or real estate transaction to be eligible for
this FHA Home Mortgage Refinance Plan.
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