FHA Offers Short Refinance Option To Homeowners
The real estate market continues to weigh down the economy as foreclosures, short sales and underwater mortgages put more Americans in a precarious financial position. The Federal Housing Administration recently announced a new short refinance program which it hopes will provide some form of debt relief to homeowners.
The program will allow qualified homeowners - those carrying underwater mortgages and who do not currently hold an FHA-backed mortgage - to apply for an FHA-insured mortgage loan. Further, borrowers must be current on their existing mortgage and their lenders must agree to write off 10 percent of their loan amount in order to be eligible.
Underwater mortgages, which force homeowners to pay more on their home than the property is worth, have been largely blamed for the increase in strategic defaults. Although some Americans choose to walk away from their home and let the bank foreclosure, the long-term credit score damage can make it more difficult to secure future financing.
Consumers whose homes are underwater should contact their lender to determine if they qualify for refinancing. Federal programs may also be beneficial to those seeking debt relief from high mortgage payments.
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