FHA Secure: Excellent Option to Fix Your ARM
Being a excellent borrower so far until the financial crisis struck? Are you struggling with your late mortgage payments because your adjustable loan was reset to a high rate? Or do you struggle to pay your loan repayment due to financial hardships?
Of all the terrible luck that can happen to a excellent person -financially- (this sounds worse if that person is you) then finally came a helping hand.
Yes, you may be able to take the advantage of Federal Housing Administration (FHA) Secure Refinance Program and get into a 30 year fixed rate mortgage. Sounds like fallen quails to you?
Well, at least you have to take the step to take it. And you’ll need to qualify under the standard FHA debt ratio – which may be one reason why you have your current loan.
What is FHA Secure Refinance Program? It’s a refinance mortgage program designed by the FHA to help you refinance your loan. It is for you who had excellent credit until the interest rate on your adjustable-rate mortgage (ARM) was reset or recast up to an amount that you’re unable to repay because the monthly installments were too high to handle, resulting in you being late to repay or delinquent payments.
The FHA Secure Program can help people who have missed up to 3 mortgage payments over the previous 12 months. The program can also help you who have experienced a (hopefully) small -term economic hardship such as medical expenses, loss of overtime pay, as well as those affected by payment shock from a rate reset.
The new FHA Secure Refinance Program is all about rate and term refinance, no cash out allowed. If there’s enough equity available, the loan can include money to cover past due mortgage payments, closing costs, and late fees. The loan only applies to an owner-occupied principal residence.
If you qualify for it, you’ll get some benefits from the FHA Secure refinance. The FHA Secure Refinance Program can:
- Allow late mortgage payments (Which normally disqualifies a loan)
- Refinance your high ARM into a 30 year Fixed Rate mortgage
- Allow financing your home with just 3.5% of the home equity
- Provide help to avoid your default and keep your house (so you can relax, no one will kick you out of your house)
Now that you’ve read about the benefits and are all interested about it, the next question will be how do I qualify for the FHA Secure Refinance Program?
Here are the general requirements for FHA Secure Refinance Program:
- The only cause of your delinquent mortgage payment was the rate reset and nothing else.
- You have a excellent credit at least 6 months prior to the rate reset
- The mortgage that you want to refinance is a non-FHA adjustable rate mortgage (ARM)
- You have sufficient income to qualify for the new mortgage payments
- You have a sustained verifiable history of employment for a minimum of 2 years
- You have a letter of explanation regarding the late payments
To determine the maximum loan amount, FHA will rely on a current home appraisal, even if you have owned the home for less than one year, and may review appraisals in declining markets.
Excellent news is, any type of conventional loan can be refinanced with FHA Secure, as long as you have been current on your mortgage for the last 6 months and have enough income to repay the loan. If you are delinquent now, the default must have been due to the payment shock of a mortgage rate reset or, in the case of an Option ARM, the recasting of your mortgage to a fully amortized loan.
If you’re wondering why in the world would somebody or in this case, the government, would provide such refinancing services to its delinquent civilians? Well, one of the main goals of the FHA Secure Refinance is to help restore liquidity and stability to the real estate markets. That is why the government wants to help the subprime borrowers.
Read also: FHA Loans and FHA Mortgages
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