FHA Refinance Loan
king.geek22 at gmail.com
king.geek22 at gmail.com
Mon Sep 1 17:57:12 CEST 2008
On October 1, 2008, new FHA Refinance Loan Guidelines will go into
effect as part of The Housing and Economic Recovery Act of 2008. This
new FHA Mortgage program is designed to help thousands of homeowners
who are at risk of foreclosure in their curent conventional or sub-
prime home loans.
The details of The âHOPE for Homeowners Act of 2008â are as
1. Eligible Borrowers
Only owner-occupants who are unable to afford their mortgage payments
are eligible for the program. No investors or investor properties will
qualify. Homeowners must certify, under penalty of law, that they have
not intentionally defaulted on their loan to qualify for the program
and must have a mortgage debt-to-income ratio greater than 31% as of
March 1, 2008. Lenders must document and verify borrowersâ income
with the IRS.
2. Home Equity & Appreciation Sharing
In order to avoid a windfall to the borrower created by the new 90%
loan-to-value FHA-insured mortgage, the borrower must share the newly-
created equity and future appreciation equally with FHA. This
obligation will continue until the borrower sells the home or
refinances the FHA-insured mortgage. Moreover, the homeownerâs
access to the newly created equity will be phased-in over a 5 year
The borrower agrees to repay the following share of any home equity
appreciation with the FHA when the home is sold or refinanced again;
A. 100% of any equity earned is paid to the government FHA if the home
sells or the borrower refinances within 1 year.
B. 90% of any equity earned is paid to the FHA if the home sells or
the borrower refinances within 2 years.
C. 80% of any positive equity earned is paid to the FHA if the home
sells or the borrower refinances within 3 years.
D. 70% of any positive equity earned is paid to the FHA if the home
sells or the borrower refinances within 4 years.
E. 60% of any positive equity earned is paid to the FHA if the home
sells or the borrower refinances within 5 years.
F. 50% of any positive equity earned is paid to the FHA if the home
sells or the borrower refinances after 5 years.
Note: The FHA requires a 3% Exit Fee of the Mortgage Principal Balance
when the borrower sells or refinances the home again.
3. Other Requirements
Existing Subordinate Liens
Before participating in this program, all subordinate liens (such as
second loans, home equity loans, etc.) must be extinguished. This will
have to be done through negotiation with the first lien holder.
Mortgage Insurance and Other Fees
The Up Front FHA Mortgage Insurance Premium that is required on all
FHA Refinance Loans will change as part The Housing and Economic
Recovery Act of 2008. The Monthly MI Rates have also been updated. The
following FHA MI rates will begin on October 1, 2008 and will be
effective for 12 months;
FHA Up Front MIP - Required on all FHA Loans (Can be financed into
1.75% - Normal FHA 203(b) Refinance 1.5% - FHA Streamlined Refinance
3.0% - FHASecure (Refinance for high risk borrowers who are already
delinquent on current mortgage)
Monthly MI ï¿½ï¿½" Multiply the loan amount by the figure below and
then divide by 12. The result is your Monthly Mortgage Insurance.
30 Year Note 0.55% - Refinance greater than 90% of the homeâs LTV.
0.50% - Refinance less than or equal to 90% of the homeâs LTV.
15 Year Note 0.25% - Refinance greater than 90% of the homeâs LTV.
Monthly MI is not required on an 15 Year FHA Refinance Loan with an
LTV of 90% or less.
The FHA Refinance Loan Process
Each new loan will be originated and underwritten on a case-by-case
basis. To get approved, your income statements, bank accounts, credit
scores and work history will be examined. A new appraisal must be
performed on your home to determine its current value.
If doesnt have positive equity, then you must contact your current
lender and negotiate with them to reduce (write down) your current
mortgage to 90% of its current appraised value. If your current lender
agrees to the write down, then you will be able to proceed with the
FHA refinance. www.my-quickloans.com
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