FHA Secure Loans, Getting Out of Adjustable Rate Mortgages

INTRODUCTION

Choices for an FHA refinance loan are available to any homeowner eager to refinance so one can decrease your monthly home loan payments. It is best to try to locate a mortgage company who may help you choose which type of FHA refinance home loan most accurately fits before you proceed with taking one out.

What are FHA Secure Loans?

FHA secure loan is a program that allows homeowners with non-FHA adjustable rate mortgages, current or delinquent, the ability to refinance into an FHA insured mortgage.  The homebuyer must have been current on their mortgage payments prior to the adjustment of their variable interest rate and must be able to document that the change in their interest rate has caused them to become delinquent.

How Much Can I Refinance?

The amount you may refinance will depend on the present value of your home and how much you currently owe on your home.  FHA requires that you have at least 3% equity in your home.  Most homebuyers will not be able to meet this standard because they bought their home with little or nothing down.  In addition, we have experienced a decrease in our home values.  Should this be the case, you would need to contact your present lender and ask them to “forgive” some of your loan balance or find a lender that is willing to provide a second mortgage for the difference.  Securing a second mortgage in today’s market is very difficult to do. More details.

What if I have a Second Mortgage?

If you already have a second mortgage on your home, FHA will allow you to keep your second mortgage loan open even if this means you owe more on your home than it is worth.  For example, if you originally purchased your home for $250,000 and took out an 80/20, you would have a first mortgage for $200,000 and a second mortgage for $50,000.  If your present home is valued at $220,000, then you would be upside down $30,000.  Your new FHA first mortgage would be $213,400 which is 97% of the new appraised value.  Your present lender on your second mortgage must be willing to sign a subordination agreement which allows the second to remain open and keeps them in 2nd position.

How Do I Qualify?

Finally, you must be able to qualify for an FHA loan.  FHA loans are full documentation only.  This means that you must be able to provide pay stubs, W2’s and tax returns to support your income.  Many buyers who originally purchased their home with stated income loans will not be able to qualify today.  You may be asking yourself why I should consider this option?  The answer is very simple.  FHA loans do not have “teaser rates,” prepayment penalties or balloon payments.  FHA loans are offered at market rate and are fully amortizing loans which means that you are reducing your principal loan balance each month.

CONCLUSION

The FHA refinance loan are best for your circumstances, according to your present financial status, after which assist you to locate a mortgage banker who will extend the refinance mortgage loan. Check out this: https://www.okcalculator.com/fha-loan/