Is the FHA Short Refinance program right for you?
We help homeowners in a wide variety of situations. Not everyone we counsel is actually behind on mortgage payments, but they may have some other issue that is causing them concern.
One situation we see is a homeowner whose home is worth less than is owed. They are fully up to date with mortgage payments, but their home has lost value.
The Federal Housing Administration (FHA) Short Refinance program is designed for people like them, who owe 15% or more on their mortgage than the home is actually worth. This plan helps homeowners refinance into a new mortgage loan that is more affordable and in line with the current value of their home. The new mortgage will be FHA-insured, and the amount owed will be set to no more than 97¾% of the home’s value.
Who is eligible for the FHA Short Refinance program?
To get access to a short refinance under this program, borrowers need to meet certain requirements:
- The mortgage must not be owned by the USDA, VA, or FHA.
- The homeowner must owe more than the home is currently worth.
- Must not be behind on mortgage payments.
- Borrower must actually live in the house.
- Meet FHA eligibility requirements for a new mortgage.
- Debt to income ratio is not greater than 50%.
- FICO score that is 500 or higher.
- Free from certain criminal convictions in the past 10 years.
This refinance program is voluntary, so you’ll need to contact your mortgage service to find out if they participate. Our counselors can help you reach out to your lender if you think a FHA Short Refinance is a good option for you.
If you do apply for a short refinance, let us help. There will be paperwork and application requirements, including written explanations of any problems that appear on your credit report. We can help you navigate all of these requirements.
We can also go over any other options you may have to find the best solution for your situation; call us today for free, confidential help.