Refinance option even if your home value is underwater

Real Estate Agent with Leanna Scott Homes

I've been blessed that none of my clients have called me to saythat they are losing their home or having to short sale due to inability to pay.  I feel that my commitment to not putting buyers into they could not afford is paying off.  The calls I have gotten are positive calls from clients who are still able to afford their home and want to take advantage of the current,  incredibly low interest rate.  Most of their home values are underwater but there's an option for them.  Here is the lastest government program that is great for buyers who are current on payment and have the means to continue making the payment timely. Here are the hightlights of the  program as described by The California Association of Realtors on August 6, 2010:


FHA launches refi program for underwater borrowers
The Federal Housing Administration (FHA) last week provided details on its “FHA Short Refinance” program that will enable lenders to provide additional refinancing options to underwater homeowners.  Beginning Sept. 7, the FHA is offering eligible underwater non-FHA borrowers the opportunity to qualify for a new FHA-insured mortgage.

Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score greater than or equal to 500. The property must be the homeowner's primary residence and the borrower's existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115 percent.

Additionally, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.

I hope this helps you to refinance and better your situation. If you do use this program, I'd appreciate it if you'd share your experience as you go so that I may pass on the information to others to help them. 

Good luck!

Warmest regards,




Comments (0)