When you owe more than your home is worth and you need an FHA Secure Short Refinance, there are typically three outcomes. Your FHA Secure Short Refinance options will depend upon the negotiations with your current mortgage lender.
- Short Refinance Write Down - This is the option of preference. The existing lender simply writes off the amount that can be refinanced into the FHA Secure Short Refinance.
- FHA Secure Refinance with subordinate financing - In many cases the existing lender will accept a secondary lien in the amount that the payoff is short.
- FHA Secure Short Refinance with a partial unsecured loan - In some cases the existing lender will write off a majority of the existing loan and allow for the creation of an unsecured loan of a portion of the amount that cannot be covered by the new FHA Secure Short Refinance loan. An example of this may be that the new FHA Secure Short Refinance loan can cover all but $45,000 and the existing lender agrees to write off $38,000. They may allow for an unsecured low or zero rate loan to cover the final $7,000 in an effort to make the transaction work.