Many, many people each week call us who currently owe more than their house is worth asking about the FHA Hope For Homeowners program.
The bad news for these homeowners is that the FHA Hope For Homeowners program seemingly doesn’t really exist (not one was done in the month of October in the entire US).
So if you currently owe more than your house is worth and are not late on your payments, you may want to consider another option — an FHA Short Refinance.
An FHA Short Refinance works exactly like a short sale, except you as the current owner stay in your home rather than sell it to someone else. Your current lender agrees to accept less than you owe and you get a new fixed rate FHA loan with an affordable payment.
There are real reasons that lenders are willing to accept a short payoff for an FHA Short Refinance. For example, who would be willing to pay more for the home after a foreclosure: an investor looking for the best deal in town on a foreclosure or the current home owner? Or another possible reason that a lender may be willing to accept a short payoff is for a quick profit on a mortgage they just bought for pennies on the dollar of what you currently owe.
So.
If you owe more than your house is worth, have good credit and are not late on your payments, we may be able to help you get your lender to agree to accept less than you currently owe when you get your new FHA loan.
Before you decide whether or not a FHA short refinance is right for you, be aware that there are fees associated with the transaction regardless if your current lender agrees to write down your principal balance or not. These fees include a credit report fee ($25) and a processing fee ($495) and possibly an appraisal fee ($350) which can all be refunded to you in the form of a credit at closing if we are successful.
There is no guarantee of success and based on what we are learning from our friends who are doing these, we estimate about a 50% chance of success.
If you are interested in learning more about whether or not an FHA Short Refinance is right for you, email or call us and we will get you a packet of information to get you started with the process.
{ 3 comments… read them below or add one }
Hi, I’m a mortgage loan officer in NM. A client of mine has a daughter in Phoenix who may benefit from a short refi. Her current loan is FHA, 1 +year seasoned, balance of $175K, homes in her area have dropped dramatically in value. She has been current on her payments. What other parameters does the short refi require to approve ie. credit score, dti, reserves. Thanks for the info.
In the meantime, her name is Vanessa Trevino 602-909-4350.
Is the FHA short refinance program only for primary resudence or can it be use for investment property as well? If it can be used for investment property, what needs to be done to get the process started
Thanks,
Bob
@Robert,
The first step is to get on the phone with your current lender and see if you can get them to agree to a short payoff.
To my knowledge, they are primarily done for primary residences — but they can also be done for investment property.
No matter what though, the first step is to get your current lender to agree to accept less than what is currently owed.
Here is a recent post that may help:
http://www.arizonamortgageteam.com/short-refinance-is-it-possible/
Good luck!
Justin
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