Wednesday, August 11, 2010

FHA offers refinance loans to underwater borrowers

By Pete MillerAugust 10th, 2010Posted in: Loans, Mortgage, Refinance

Refinance loans can be helpful to consumers in a variety of ways, which includes leading to lower interest rates on what they owe.Recently the Federal Housing Administration announced it is going to launch a program that could lead to refinance loans in a particular segment of the population.Consumers who are underwater on their mortgage may benefit by having a lower rate and having their principal reduced through the Short Refinance initiative."This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product," FHA Commissioner David Stevens said.To qualify, homeowners must be current on their mortgage while also owing more on it than the property is worth. Furthermore, consumers have to meet FHA loan standards and their lender has to agree to write off 10 percent of their balance.Other efforts from the Obama administration to help troubled consumers keep their houses include the Home Affordable Modification Program, which can assist through lowering how much people have to pay every month on their mortgage.

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