A new law passed recently will undoubtedly help struggling home-owners and the real estate market with it’s woes of record foreclosure numbers and struggling families unable to make their mortgage payments. If you continue reading this article, you will learn details of a new bill recently passed that has been designed to help families that face losing their homes due to high adjustable interest rates. The new and easier requirements and qualifications will be listed at the bottom of this article…
FHA Loan Requirements Relaxed
FHA Loan Requirements have been relaxed by the Recovery Act of 2008. The Housing and Economic Recovery Act of 2008 should provide relief of thousands of Americans that are facing foreclosure. Many homeowners with subprime loans are now able to refinance their subprime loan mortgages into more affordable fixed rate mortgages because of this new law.
FHA Credit Qualifications and FHA Loan Requirements have now been relaxed. A borrower can now find it easier to qualify with a low down payment, lower closing costs, easier credit qualifying, and straight-forward mortgage terms that are easy to understand and won’t cause a major burdon if rates go up in the future. If you are in the market of refinancing your home, and because of the FHA relaxing the requirements, now may be the best time in years to qualify for your new fixed rate mortgage.
FHA Comes to the Rescue
President Bush recently announced that the Housing and Urban Development’s Federal Housing Administration, or (FHA), will attempt to help over 200,000 plus families try to avoid foreclosure by offering an enhanced refinancing program that becomes effective immediately. The New Program and enhancements will be called the FHA Secure plan.
The FHA Secure Plan will qualify applicants based on more relaxed qualifications in order to help those families that do make payments, but due to the continued increases in the monthly payment, have been strained by the continuous increases in monthly payments. Homeowners who made regular payments before the loans were reset to newer and higher payments, will usually qualify for the new FHA Secure Plan.
Higher Insurance Premiums for Higher Risk Applicants
Also, FHA has initiated risk-based premiums that match the borrower’s overall credit profile to an insurance premium that is base on their score. Therefore, riskier borrowers will have to pay higher mortgage insurance premiums. This should allow many Americans whose families who were having trouble making their payments under the initial “teaser” terms of sub-prime loans make consistent loan payments that don’t go up unexpectedly. So far the response has been overwhelmingly favorable from homeowners desperately seeking alternatives and solutions to their rising mortgage payments.
With the combination of the FHA Secure program and risk-based insurance premiums, the FHA will soon be able to return to the role that it was originally designed to play, whish is, bringing stability to the real estate market by helping break the current cycle of foreclosures, price depreciation, and debt, by creating much needed liquidity in the now overly strained real estate mortgage market.
“FHA Secure” Loan Qualifications…
To qualify for FHA Secure, eligible homeowners must meet the following five criteria:
- A history of on-time mortgage payments before the borrower’s teaser rates expired and loans reset;
- Interest rates must have or will reset between June 2005 and December 2008
- Three percent cash or equity in the home;A sustained history of employment
- A sustained history of employment and,
- Sufficient income to make the mortgage payment.
For more qualifications and details…