OK....So we got the HVCC off of our chests Saturday when posting Appraisal Insurance???? With HVCC we need it PART I. 

In Part I the discussion was about the effect that HVCC is having not only in the real estate community, but also, and more importantly, to the consumer.  The impact on the consumer has been great, and in many cases, devastating.

So, what if you could have a program that would insure that you could refinance your house no matter what the value of your home was even 1, 3 or even 10 years after aquisition?  There is one option that is so much above the rest.....It's FHA.....

Suuuuuuuuuurrrrrrrrrrrrrrrreeeeee, FHA has drawback every blue moon, but every loan program does.  However, FHA will act as an insurance plan for you!!!!

What would it be like if when you bought your home in 2000, 2003, 2007 and you lost a ton of value and you reached out to your loan officer and said "I want to refinance, can you help me?"  I respond well, what do you think the value of your home is?  You say "I don't know" or "less than what I paid for it."

Let's take each scenario one at a time.....

First, the sidebar issue.....

How'd you like to call yor lender and the lender say what's the value of your home?  You, as a consumer say, I'm not sure, can you help me here?  With a conforming, or Fannie Mae, or Freddie Mac loan, the rules have changed because of the latest government intrusion into helping the consumer.  The short answer is no.  You need to pay me, the lender X dollars, for me to tell you what an appraiser may think that your home value is worth.  You pay me the money.  I call an appraiser and order the appraisal and wait for them to bill me and hope that they give a value that will help me help you with your refinancing scenario. 

However, with FHA, before you give me a dime, I can call an appraiser and say, Suzi thinks her home is worth $300,000.  Do you think that she's in the ballpark?  The appraiser can yell and me and say that I'm trying to steer him or her.  The appraiser can say yes, but I'll never know until I actually appraise the house, or the appraiser can say, you bet your sweet cheeks that this house will or won't appraise out.  I call you back and say "save your money, the appraiser says no way, or I can say the appraiser says "book it, you're the lowest priced house in 3 miles."  I'm helping the consumer here.  That's what we're supposed to do as a lender and FHA allows us to reach out to assist our clients.

Let's try scenario #2.  You call your lender and say that you want to refinance, but you know that your home is worth a lot less than what you paid for it.  You know that there's no way that you'd qualify for the original program because you had a conventional loan and you lost all of the equity because of the new value.  IF YOU HAD BOUGHT YOUR HOME WITH AN FHA LOAN, YOU CAN DO A STREAMLINE REFINANCE AND REFINANCE YOUR HOME WITHOUT WORRYING ABOUT THE CURRENT HOME VALUE!!!! 

Is this hot or what?  FHA, acts as insurance for those who want to refinance and not have to worry about their home values in the future.  As with any program, there are limitations and guidelines.  You need to have no 30 day lates on your mortgage for the past 30 days.  You can't take cash out or walk away from the closing with any cash.  You need to make sure that the refinance is dropping your rate a certain percentage and so on and so on. 

But who has ever heard of a program like this?  What if you had purchased your home for $200,000 four years ago and it's worth only $160,000 today?  Fannie and Freddie are going to have some substantial issues with this or at least some major price adjustments if your LTVs (loan to values ((amount of equity in your home)) exceed certain guideline points.  FHA says, hey, you had a mortgage worth 96.5% or 97% of what the value was when you purchased the home.  You meet all of the other guidelines....we're good.  Let's go.

There's so much more that you need find out if you want to buy a home FHA or refinance your current FHA mortgage, but a great way to start is by talking to a lender who can actually do FHA loans (there are a lot of them who cannot do FHA loans).