The FHA, or Federal Housing Association, has grown in the last two years to a considerable size. This just shows how important this one agency can be when it comes to helping a country to get out of the mortgage hole it is in. The latest numbers are quite considerably. By the end of 2008, FHA will provide guarantees for as many as 3 in 10 American home loan borrowers. 

FHA provides only a guarantee to the loan, not the loan itself. Traditional mortgage lenders qualified to work with FHA still fund the loan and service it. Should the borrower default on the loan, FHA will pitch in to help cover the costs of the loan. This helps to insure the loan and therefore allows more lenders with assurance that they can lend to these buyers.

Many of the people that will be included in that picture are those with bad credit. Others are those who do not have any verification of income on the books (FHA loans can help hard to qualify lenders to get these loans.)

As you may know, the HOPE for Homeowners Program kicked in on October 1st, 2008 and gives FHA even more opportunity to help the average homeowner. The program is aimed at helping people to get better loans.  The program was put in place through Congress action and the Bush Administration. It gives FHA the ability to guarantee up to $300 billion in home loans. These are fixed rate home loans specifically for those who are struggling.  The program will be in place over the next three years.

What does this mean for the outlook? According to the Congressional Budget Office, there will be about 400,000 households in the US that will get FHA home loans in the coming years.  OF those, it claims that about one third of them will fall behind at some time on those loans.

What’s the risk?  There is risk here in the Hope for Homeowners program, according to some. They fear that the government is taking on some of the worst loans out there and that this could pose a risk.  Yet, FHA loan requirements are out there and they are much stricter than those offered subprime loans in the not so distant past.

FHA loans make sense and the ability of the FHA to provide this type of backing to the American family is necessary. The fact is: the only way to get out of the housing slump is to get good home buyers buying homes. This program and others like it, will continue to do that.

Are you a homeowner in the United States looking for the American Dream? If so, you may be in trouble if you still have an ARM, or Adjustable Rate Mortgage. As you likely know, the last year or two has been very bad for the housing market and ARM rates are one area in which the problem got worse. Yet, many of those who did pick up a loan since 2002 have had that loan adjust already. This is the shock that has hit the housing market. There may be more shock coming.

What’s A Mortgage Reset?

Mortgage resets adjust the interest rate on the home loan a person with this type of loan has.  For example, let’s say that you have a home loan with an interest rate of 6 percent for the first three years.  You picked up that loan in 2006 and have since had no problems paying your mortgage loan. Now, the reset period is coming to an end and you are worried. When your loan resets, what is the likelihood that the loan will be too expensive for you?

There is a new wave of mortgage resets set to hit the country in the next months, and will likely continue through 2010 as a number of “option ARM’s” were put in place. These are subprime loans and some are not.  The point is, they are adjusting in the coming months which will cause a new wave of homeowners unable to pay their payments.

Do Something Now

If you are a homeowner with an option ARM or any other adjustable rate loan, now is the best time for you to make a change. What you will need to do is get that loan refinanced as soon as possible, before the loan is in fact adjusted.

FHA can help you to get into a more affordable loan if your loan has recent or will do so prior to the end of 2010.  This will be an outstanding opportunity for you to get a lower interest rate, fixed loan that likely could save you a substantial amount of money.

The worst thing you can do is wait it out. Right now, interest rates are very low. Even those with credit scores that are low may qualify (currently the FHA will accept credit scores at 580 or above.) You have the opportunity to save substantially.

Estimates are that some $500 billion worth of mortgages will be affected in the next four years by these adjustable rates. The FHA can help many to get out of this problem.

With all the latest legislation passing through Congress specifically aimed at the housing market, it’s getting not only harder to get loans but more difficult to understand it all.  Luckily, the HOPE for Homeowners Program looks to be one with a basic breakdown.  The program has authorization under the National Housing Act, which was amended earlier in the year by the Housing and Economic Recovery Act of 2008. 

What Does It Say?

HUD issued Mortgagee Letter 2008-29 detailing what this program includes.  First, it gives any current or delinquent borrowers the ability to refinance into a 30 year fixed rate loan through FHA. In order to qualify for this aspect, you must have made at least six payments on the mortgage prior to requesting the refinance. 

Additionally, the program is designed for those who have a debt to income ratio higher than 31 percent with their current home loan.  The original loan must originate prior to January 1st, 2008. 

• Payment to income is limited to 31 percent while debt to income is limited to 43 percent.
• These numbers may be higher, according to the program, following a three-month trial modification put in place through the program first. 
• There is a maximum loan of $550,440 on all loans through the HOPE for Homeowners program, (referenced as the H4H program.) 
• There is also a restriction of a 90 percent loan to value in place on these loans.
• All homes must be owner occupied homes, on one unique properties
• FHA approved appraisers must appraise the properties within three months prior to the closing
• Origination fees are capped at 1 percent
• Buyers do not pay closing costs and prepaid items upfront
• A 3 percent upfront mortgage insurance premium and annual premium up to 1.5 percent will be applicable.

One of the unique aspects of the HOPE for Homeowners program is that lenders must insure that appraisals are complete within the letter of the law.  In other words, they are responsible for any poor or fraudulent appraisals that lead to an FHA insured mortgage.  Inflated home values, considered one of the problems within the housing market crash today.

More Information

The HOPE for Homeowners program promises to offer outstanding opportunities for homeowners to get out of the hole they are in.  Namely, they are able to get into FHA loans with a fixed rate, often lowering the amount they must pay monthly.

The program is available to those who have government loans and conventional prime loans, as well as Alt-A loans and the worrisome subprime loans. This includes most types of mortgages, too, including negative amortization, payment option and interest only mortgages.  There are legal restrictions, for example, any state or federal fraud conviction within the last ten years can disqualify an individual from obtaining the loans.

For homeowners struggling with their current loans, falling within these areas, there is no doubt that the HOPE for Homeowners Program offers a lifeline.  It is highly encouraged that you seek out FHA lenders to get the process started.
 

FHA, or the Federal Housing Administration, is a backbone to our lending industry in the United States. What FHA does is provide lenders with reassurance that the loans they provide as FHA backed loans are safer than those without this backing. Borrowers of FHA programs come from a wide selection of people; including those with less than stellar credit, those looking for the lowest interest rate possible, and people looking for backing from the rocky market. The good news is that FHA loans can be refinanced.

Of Particular Importance

As a homeowner currently, you may be looking for help in getting out of a bad mortgage. It could be that you have had a rate adjustment, or you could be facing other circumstances in which you simply can’t afford the loan you currently have on your home. It is happening to millions in the country right now. FHA is there to help.

FHA will provide refinancing into better loans to qualified buyers. You don’t have to have the highest credit score to get this help, either. FHA is allowing borrowers who do not have a strong credit history but are attempting to make their mortgage payments, help in getting into new loans. You may be approaching your limit and risking default, or you may already be in default. If this is the situation, look into FHA loan refinancing options for you. Many people will qualify for these loans and that means getting to stay in your home long term.

Of particular interest to those struggling with their loans is the FHA’s program: FHA Secure. If you are planning to sell your current home because you are on the verge of facing foreclosure, this is a potential option for you to stay in your home, too.

Who Qualifies For Help?

There are many people that will qualify for FHA Secure, but it is best for those who:

• Have been “good” borrowers in the past
• Have had their mortgage adjust and because of that adjustment are now facing problems making monthly payments
• Are on the verge or actually in foreclosure
• Had good credit but their current situation has ruined their ability to refinance their loan elsewhere through other loans
• Have a maximum home value or mortgage value of $417,000
• Need immediate help, all proceedings from FHA Secure need to be initiated and closed before the end of the year (unless renewed)

Do You Need Help?

Those who are struggling with their current mortgage will want to seek out help through FHA Secure. Even if you do not meet the qualifications for this program, FHA offers various opportunities for help. FHA loan refinancing is an option even if you currently do not have a FHA backed loan. Federally Insured Loans are designed to provide you with the ability to get a lower interest rate. They also help people who otherwise may not qualify for their loan.

If you are considering buying a home, you will not need FHA refinancing, but you may still want to qualify for an FHA loan for your new purchase. Talk with a specialist about the options available to you. These loans are available to a variety of people in a number of different credit scenarios.

As with any loan, you will need to show proof that you can afford the loan. If you are unable to make payments due to lack of employment, you may not qualify for an FHA loan, or any loan. Many people will qualify for this program, even those who do not have great credit.

Find the help you need for FHA loans through FHA Secure or other FHA loan programs currently available.

Over the last couple of weeks, I have steadily been keeping up with the news on mortgages and what is happening in the industry. Let’s give a brief recap because no matter what you read, you are going to find that many copies are returning to offering FHA products as a part of their equation. I honestly cannot blame them because there are so many people dealing with situations that they didn’t even know they would face. Consequently, they need viable options and FHA provides realistic solutions.

As recent as yesterday, I read that Sun West Mortgage Company has launched a web-based training series, its free and on comprehensive FHA and reverse mortgage. As a person that has taught web-based training, it is a huge advantage and allows many different people to attend that otherwise might not have the opportunity.

I must applaud them for being one of the companies that steps out and offers this program in another format. Mortgage professionals can schedule themselves for the class and even without knowing the details of this class; I do believe that it should be researched. Find out the ins and outs of the different classes and how it can benefit your career as you are in a position to help many homeowners.

I read another article that stated Green Valley Mortgage in Bloomingdale recommends if you are a first-time buyer to consider an FHA mortgage. The senior loan consultant for Green Valley Mortgage outlined some of the requirements for an FHA loan. When I read there are some down sides and one of them being that the mortgage must be $275,200 or less it made me want to stand up and say — choose a starter home and do not focus on your dream home. You will set yourself up for success versus failure if you begin with a starter home. Depending on the area where people want to live, you should be able to find a starter home within the parameters of an FHA mortgage.

The next topic that continued to be discussed was reverse mortgages. Understand that the reversed mortgages are being offered to the older home owners. What I wasn’t aware of and you know how much I love learning is there are three types of reverse mortgages. The types are FHA-insured, lender insured and uninsured. As with anything, the parameters are different for each. Research, research and more research. Even with an older home owner, especially if this is an elderly parent, I would also recommend they in particular talk this option over with an adult child or even a lawyer to make sure that you are not being taken advantage of, nor going to lose your shirt because you did not foresee a situation.

Whether you are a first-time buyer, someone who seeking options to avoid foreclosure or even an older home owner looking at options, FHA offers many solutions that should be considered. If you do not fit into one category that does not mean another option is not available. As I have stated throughout, do your research and find out what is best for you. It is a new year and let’s make better decisions.

Dr. Taffy Wagner

With all this talk in the news and media about foreclosures lately and different programs to help those facing foreclosure, I began wondering about refinancing. So many times people refinance their loans and I thought someone is probably asking themselves this very question – can they refinance their FHA home loan? While they are thinking about this question to themselves and not asking a person, they begin to become anxious about their housing situation. Not knowing the answer to questions can lead one to a path of wrong decisions and stagnant path, not taking action which can be detrimental. Read the below information slowly and carefully because this could be the answer you are looking for.

An FHA streamline refinance is a mortgage refinance of an existing FHA loan with limited amount of documentation and qualifications which streamlines the process. I have to admit when I think back to the loan processing for purchasing a house or car, it takes up some time. Sitting there going through pages and pages of information, terms, and more making sure nothing is left out. I applaud the fact they have streamlined this process. These times made me feel as if I was enlisting in the military again. Now that you are aware of what a FHA streamline refinance is, let me share regarding the cost. This is always going to be important. There are many types of interest rate and fee combinations for FHA streamline refinance. Check with your lender for what the parameters are.

You know that I could not let you guys think that is all there was to this loan. Of course not, there are qualifications. You should not even be surprised because you have to qualify for most things today. Seems there are only two qualification requirements which are (1) must currently have a FHA loan; and (2) must be current on mortgage payments. I ask you if you were not current, why would you be applying for an additional loan? It does amaze me sometimes watching the news hearing what people are saying.

For those that were preparing to ask this question, is there a difference between a normal refinance and an FHA streamline refinance, the answer is a strong yes. The difference from what I surmised is qualifications and documents required to qualify for the loan. The benefit to me is streamlining. If this limits the amount of documents and qualifications, this could be the one for you. A big one before I forget is that with a typical refinance loan the loan cost will be higher than an FHA streamline. Oh another huge benefit to this is FHA does not require an appraisal for a FHA streamline. How many of you know the costs of an appraisal can sometimes get you? For that reason alone, you should be doing your homework and researching what you think is best.

The main concern I have is that you go to a loan officer and have not fully done your research on the type of loan you are seeking and then get turned down. You can never have too much knowledge. Take the time to research all types of loans and decide on what works best for you.

Taffy Wagner