NEW GUIDELINES FOR FHA LOAN REFINANCING

The doors to FHA mortgage refinancing appear to be open once again and it appears that literally overnight, getting approved for an FHA refinance has become faster, easier and more streamlined.

First of all - what is an FHA mortgage?  The FHA (Federal Housing Administration) has been in existence since 1934 when it was founded in the course of the Great Depression.  An FHA insured loan is a Federal Housing Administration mortgage insurance backed mortgage loan that is provided by a FHA approved lender.  These loans require a mortgage insurance premium (MIP) equal to a percentage of the loan amount that is required at closing.  FHA loans are more accommodating than other mortgages and because they require less down payment than a conventional mortgage have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.  FHA mortgages has become more popular due to the favorable terms they offer compared to other loan types.  

It appears FHA wants to see more homeowners qualify for the FHA Streamline Refinance so it's making a small change to the rules.  Now FHA-backed homeowners will get access to refinancing programs with no income verification, no employment verification and no credit check.  In a nutshell - if you have an FHA mortgage, you can refinance it!  EVEN if you are underwater (you owe more on your home than what it is worth in this market).

Why would FHA want to offer this?  Because it is in their best interest to put all FHA-backed homeowners into the lowest mortgage rates possible because with lower payments, in theory, come fewer defaults and fewer claims.  

If you have been turned down in the past for any of the above reasons, try again.  Call your lender and find out if you now qualify.  If you have further questions on this program I recommend contacting Jason Levine at Mortgage Capital Associates in Freehold, NJ. He will be happy to provide you with the latest information and is a lender I trust and know will provide you with the best rates and service in the industry.

I am hoping we start to see more of these programs available in the future.  We need to help all families who are truly struggling and want and need to stay in their homes.