New rules for the Hope for Homeowners Program will encourage more lenders to participate, and allow homeowners to refinance to more affordable FHA loans.
The Hope for Homeowners Program was created to aid homeowners through loan modifications and guarantee FHA-insured mortgages. Lenders approved by the FHA will offer new discounted mortgages to help you keep up with monthly payments on mortgage.
The Federal Housing Administration (FHA) announced the changes to assist homeowners at risk of defaults or foreclosures. Weeks after its implementation, the number of applications for the Hope for Homeowners Program was less than expected. Though interested, some lenders did not participate because they felt some regulations were too burdensome. Borrowers also can’t get lenders to forgive a part of their debt to qualify for a new FHA loan.
To solve this roadblock, the FHA decided to:
- Reduce potential losses for lenders by insuring 96.5 percent of the home’s value. Previously, FHA only guarantees 90 percent of the home value. Declining home values have hit lenders hard, because homeowners no longer have equity in their homes.
- Offer second loan holders immediate payment in exchange for releasing borrowers’ liens. Borrowers sometimes take out second loans to pay for their homes. Lenders put a lien to these loans, which they refuse to release during a loan modification. This move alleviates that situation.
- Reduce monthly payments on mortgages by extending mortgage loan financing terms. Loan terms can now be extended to up to 40 years to give your family more time to pay off the loan.
The Hope for Homeowners Program took effect last October 1 and will last until September 30, 2011.
Like many homeowners, you may be having a hard time keeping up with mortgage payments. One thing you can do to avoid possible foreclosure is to refinance your mortgage.
Mortgage refinancing essentially pays off your current mortgage and creates a new one. Luckily, you can refinance through the Federal Housing Administration (FHA). FHA can swap adjustable mortgages that are about to go to a higher rate to a fixed-rate mortgage.
This would give you lower FHA mortgage rates. It will also allow you to pay off your loan. With FHA refinancing you can also add extra payments on each month to lessen the amount you’d have to pay for the principal and interest.
The following are reasons why you should refinance to FHA loans:
- Current FHA rates are more attractive than those offered by conventional loans. You only need to pay 3 to 5 percent down payment with an FHA mortgage unlike traditional loans that can require as much as 20 percent.
- Qualification is easier because you don’t have to have a perfect credit history to qualify for a loan.
- FHA mortgage rates remain fixed for the whole life of your loan, which means monthly payments remain the same.
- If you have an adjustable-rate FHA loan, your current rate can only increase one to two percentage points in a year, and 5 to 6 percentage points over the life of the loan.
- Homeowners aged 62 and above can convert their home equity to monthly cash payments.
- Various FHA programs see to it that homeowners are protected from foreclosures.
There’s a government program that can help you with your mortgage, to prevent foreclosure.
The Hope for Homeowners (H4H) program, approved by Congress last July, will allow you to refinance to a more affordable 30-year fixed-rate mortgage through the Federal Housing Administration or FHA. The program, which runs from October 1, 2008 until September 30, 2011, is an alternative to expensive mortgages that will help you keep your homes.
You’re eligible for the program if you:
- are living in your current home, which is your primary residence
- have no ownership interest in another home
- cannot pay your mortgage without assistance
- have made at least 6 payments for your mortgage that should have originated on or before January 1, 2008
- have paid more than 31 percent of your monthly income as of March 2008
- can prove that you haven’t been convicted of fraud in the past decade, missed debt payments deliberately, and didn’t provide false information to get your current mortgage
Hope for Homeowners is a voluntary program, which means you and your lender must mutually agree to the terms of the program.
Other terms in the program are the following:
- loans awarded will be based on your ability to repay the loan
- borrowers have to share any equity and future value appreciation with the FHA
- lenders have to take in significant losses, which are less than the losses associated with foreclosure, to benefit from the profits of government-backed loans,
- new mortgage will not be more than 90 percent of the new appraised value
- borrowers can’t take on a second mortgage for the first five years from getting the new loan
More information on how to apply for the H4H program is available at the U.S. Department of Housing and Urban Development (HUD) website.
If you are having second thoughts about buying a house amid the current housing crisis, Federal Housing Administration (FHA) loans may just make you change your mind.
FHA-insured loans are becoming more attractive to homebuyers these days. Borrowers have set their sights on federal insured loans because getting conventional loans from private institutions have become more difficult due to tighter lending procedures. As a matter of fact, 530,000 FHA loans were given to people who bought and refinanced their houses this year. The preference to FHA loans has caused a 160 percent increase compared to the same period last year.
FHA loans are among the best choices for homebuyers. It doesn’t matter if you are buying a home for the first time or planning to refinance your mortgage. These loans require you to pay only a 3 percent down payment—way cheaper than what private insurers demand for conventional loans. With a 3 percent down payment, you can save a lot of money that you can use for other things. In addition, you can make extra payments on your monthly mortgage payments so that you can pay off the loan at a faster rate and save money on interest.
There will be some slight changes though. The housing bill, which was signed into law in the latter part of July, will raise the down payment requirement for FHA loans to 3.5 percent. Don’t be disappointed because this increase is meant to prevent foreclosures in the future. The bill will also get rid of seller-funded assistance, a practice where sellers provide homebuyers money to pay for down payment.
You can be assured that these developments concerning FHA loans would not get in the way of the program’s goal of helping more people have access to decent and affordable homes.
“It’s a viable alternative, sometimes the only option - for homeowners who want out of their high-cost loans”.
Since this government program started in 2007, 200,000 people have received FHASecure loans. Mortgage brokers are saying that these loans have become a viable alternative, in some cases the only option for homeowners to get into a low, fixed rate loan and save hundreds a month on their payments. The average savings for people in this program are $400 per month.
Most people in subprime loans don’t want to hit their resets. Even though subprime loans are only 7% of U.S. mortgages, they account for 42% of delinquencies. In the year-end period ending in March, 650,000 home have been foreclosed upon. Just this year, 210,000 people have lost their homes.
Under new rules that begin in July, 2008, the FHASecure program will be open to all subprime ARM borrowers, not just the ones whose loans have already reset. A few requirements to keep in mind: You can be no more than 60 days late or 30 days late twice in a 12-month period. You also need to have either home equity, or cash, equaling 3% of the mortgage principal. If you are 3 months behind or 30-days late twice in a 12-month period you will need to have 10% home equity or cash, equaling 3% of the mortgage principle.
These loans may also be easier to qualify for because they are guaranteed by the government so your lender has less risk.
See if you have enough equity in your home to refinance by viewing your current home value when you enter your zip code and street address on this site.
WASHINGTON - The 10 month-old FHASecure program, the Bush Administration’s response to the nationwide mortgage crisis, has already helped 200,000 American families to refinance their mortgages and keep their homes, U.S. Housing and Urban Development (HUD) Deputy Secretary Roy A. Bernardi announced last Thursday, May 15.
FHASecure was launched in August 2007 to assist beleaguered homeowners to refinance their current or past due mortgages through HUD’s Federal Housing Administration (FHA). Through FHASecure, the FHA can offer refinancing to those who have good credit histories but who could no longer afford their mortgage payments.
“Over the past several months, FHA has been working to help families who want permanent relief from their high cost subprime mortgages,” said Bernardi. “We are proud to have helped these struggling homeowners keep their homes.”
Between September 2007 and February 2008, FHA insured 100,000 refinanced mortgages. FHA backed another 100,000 loans in the past three months, insuring twice as many loans as the program did in its first six months, as more homeowners continued to learn about the benefits of FHA’s traditional 30-year fixed, prime-rate financing.
“The Bush Administration’s FHASecure product has quickly proven to be a responsible solution for 200,000 American families who are in the right house, but the wrong mortgage,” said FHA Commissioner Brian D. Montgomery. “These homeowners have found affordable relief from their exotic loans, and FHA is on pace to help a total of half million families keep their homes by year’s end.”
The government lowered a key interest rate by .75% on January 22.
That’s a total rate cut of 1.75% since September. Stock markets around the world have been plunging the last 3 days because consumers in the United States are unable to make their home payments, threatening to drag the economy into a severe recession.
The government is pulling out all the stops to help you get an affordable payment by the dramatic EMERGENCY RATE CUT today.
Rates for a 30-year fixed rate dropped to 5.49% last week and could go below 5.00% as early as next week especially if the Federal Reserve lowers rates again as expected before the end of January.
December 21, 2007 - No taxes will be due by homeowners who have mortgage debt written off either through a renegotiation of their loan or a foreclosure. Previously, mortgage debts written off have been taxable by the IRS.
This was signed into law by President Bush yesterday.
This law does not help homeowners who are current on their payments or who refinance (the vast majority of homeowners).
If your payments have or will soon rise, get the process rolling before the end of 2007 because:
- Home values are expected to fall by 4.5% in 2008 (source: Fannie Mae). The less equity you have, the harder to refinance your payment.
- Foreclosures rose 68% in November 2007 (source: RealtyTrac). This is adding to the glut of homes on the market, further reducing prices.
- Tough new rules on refinancing start next year. If you can’t meet the new requirements, you won’t be able to refinance.
The group of lenders is willing to give you a new payment amount as soon as today.
The government announced a payment freeze for homeowners whose payments have or will soon reset to sharply higher rates. This was announced by President Bush on December 6, 2007.
Your payments can be frozen for 5 years at your low, teaser rate if you meet these qualifications:
1) Your credit score must have been below 660 when you got your loan and your score must not have improved more than 10% since then.
2) You cannot have been more than 90 days late on your payment in the last year.
3) The equity in your house must be less than 3%. Example: If your house is worth $100,000, and you owe $90,000, you’ve got 10% equity and you don’t qualify for a payment freeze.
4) You must live in your home. You don’t rent it out.
5) Your payment must be going up more than 10%. If your payment is going up less than 10%, you don’t qualify.
Don’t meet qualifications for payment freeze?
If you don’t meet all 5 qualifications above, there is still good news. You can request easy refinancing from this group of lenders who may be able to give you a fixed rate, taking advantage of the 1% rate cut put through by the government.NOTE: With loan demand down, lenders are anxious for business. You may be able to simply refinance to a lower fixed rate.
Despite home prices having fallen 2% since a year ago, overall, your home remains a great investment. The typical owner selling today has seen their equity increase by $61,700 since they purchased their home (typically 6 years ago).
This is based on the National Association of Realtors report issued on November 21, 2007. The median home price was $159,100 in 2001 and is now $220,800 (as of the 3rd quarter, 2007).
Having equity gives you great leverage when you refinance to a fixed payment. Normally, if you don’t have enough equity (about 20%), you won’t be able to refinance. This can save you $250-$300 per month on a typical $1,200 payment.
You can also use the cash you receive to pay off bills or to use for major purchases such as home renovation, college - anything you want.
