Because of the horrendous mess that the world is in financially these days, many people found themselves with top heavy mortgages. It also meant that they were locked into paying high interest on large amounts of money and this led to many foreclosures over the past couple of years. To counteract this, some people went into refinancing deals, like the government’s HARP program for instance, while others looked to the FHA for help.
We all know how it starts. Inflation starts to run rampant, employment is on the decrease and many companies, in the quest to survive this terrible squeeze on the economy, started to downsize. Those unlucky people who were put on short time or sacked altogether now found themselves with little money and a home that was literally sucking them dry.
The FHA already had some scheme in operation but decided to change the criteria somewhat when it came to refinancing. For example, the it brought in ‘Streamline Financing’ which makes the whole process faster and easier to contend with. They do not require any new credit checks or proof of employment checks now as long as the loan is applicable in certain circumstances. In this case, ‘streamlining’ applies to less paperwork and not to the costs involved in any refinancing process.
This kind of set up is ideal for those who are finding the mortgage rates just too high to contend with. A refinancing loan is specifically designed to make life easier by lowering monthly outgoings on the principal amount and the interest charged too.
Qualifying Provisions
Of course, the originating loan must be insured by the FHA and it must also be completely up to date to qualify. The mortgage must also have been in existence for a six month period too. This is a new part added to the rules since, in previous times, this refinancing could be applied for almost immediately the loan came into being.
Also, if the new loan has a ‘cash back’ offer involved, the FHA will only grant the refinancing if they do some other checks on the borrower. This includes an appraisal and credit check too so these can be quite stringent.
Foreclosure
Some people ask if they can use an FHA Streamline Financing loan to stop the lender from foreclosing. The answer is in the positive, but the delinquency rule will still apply here. In fact, this kind of scheme, like so many others, is meant to reward those who keep up with payments.
It would seem then that those who anticipate problems somewhere in the near future should actively seek advice on schemes like this well before the crunch arrives. Otherwise, all the schemes that offer refinancing will not consider someone who has fallen behind with mortgage payment.
The schemes are set up to help those who are genuinely trying to survive and not those who overstretched themselves in the name of greed in the past. The trick here then is to plan well ahead and keep track of income and expenditure to avoid losing that much cherished home.