Steve Lines (Branch Manager at Academy Mortgage in Mesa) recently sat down to discuss the FHA short refinance: what it is, what people need to know about it and what kinds of options are available.
From the video:
What is a FHA short refinance?
The FHA short refinance is a program that FHA announced earlier in August of this year where they are allowing for non FHA good borrowers who are under water to refinance if the existing lender agrees to write down a portion of their principal.
And what would be the guidelines which the mortgage would fall under?
It would fall under standard FHA guidelines as far as underwriting criteria and some of the nuances are that the existing note holder has to agree to write off at least 10% of the principal balance and the first lien can go up to 97.5% with a maximum combined loan to value of 115%.
So theoretically, this would give someone who is under water to refinance to a lower reasonable amount that the house may be worth right now.
Yes, the FHA short refinance program is designed to help people who are good borrowers to get an FHA loan, get back on track and get a loan that is insured by FHA.
Have questions about the FHA short refinance program? Be sure to contact Academy Mortgage for help.