FHA Christian Home Loan Refinancing
FHA Christian home loan refinancing is an option that helps American families who are in danger of losing their homes by offering them an alternative to foreclosure. The Federal Housing Administration (FHA) was established after the Great Depression and is still operating today, still helping Americans to live the American Dream by furnishing them with options so they can purchase a house and continue to live in their house as long as they choose to. FHA home loan refinancing offers options such as cash out or streamlined refinancing. Building equity over time will make it easier to refinance later. A streamlined option allows the homeowner to refinance without a credit check, income verification, underwriting, appraisal, or even without an application.
Cash out options allow homeowners to use their equity to remodel their home, take a vacation, pay off debts, pay for college tuition, or use the money for anything else they choose. The difference between the value of the home and the actual amount owed against the home is the equity. FHA home loan refinancing gives the borrower an opportunity to not only cash out the equity but to refinance at a lower interest rate which can save a lot of money and many years off the mortgage. Cash out options can be very attractive to those who are deep in debt and need options to get out of debt. Some homeowners may find that they can pay off high interest credit card debt and obtain a lower monthly payment on their mortgage making it easier to meet monthly obligations and may even allow them to put money in savings.
Streamlined options allow the homeowner to refinance without the usual requirements if the homeowner's current loan is through FHA. If a person has a FHA mortgage then he or she will not have to meet the usual guidelines set up to qualify according to debt to income ratios. However, if the current mortgage is with another bank or mortgage company then streamlined options would not be available to the borrower. FHA home loan refinancing will normally require that a person present his or her income in comparison to debts to make sure that debt does not exceed income. The loan officer will normally take the total amount of the monthly house payment and divide that by the borrower's total monthly income to get a percentage. To figure total debt to income ratios include all monthly debt plus the house payment and divide the total debt plus the house payment by the gross monthly income to get a percentage. Most lenders require a percentage of around 40% or less before they will grant an approval.
Homeowners will have to provide some important documents for verification before an approval can be made on a mortgage refinance with FHA. Qualifying for FHA home loan refinancing will normally require that borrower's provide all of the places they have lived over the last couple of years, all employers over the last couple of years, and any addresses and financial information of any other owned real estate. An estimated value of current assets is also required. This includes personal property such as clothing, appliances, jewelry, furniture, and so on. Self-employed borrowers will have to provide their personal tax returns for the last couple of years, and their profit and loss statements for the business.
Mortgage insurance is a requirement with FHA home loan refinancing if the borrower pays down less than 20% on a mortgage. The insurance helps to protect lenders in case of defaults on mortgages. Mortgage insurance can be discontinued after certain requirements have been met by the homeowner. Mortgage insurance is not the same thing as homeowner's insurance. Homeowner's insurance pays for damages or destruction of a home in case of fire, flood, damage caused by wind, and so on. Mortgage insurance is assurance on the mortgage for the lender in case the homeowner does not pay for the home. The insurance is usually a very small percentage of the total loan amount.
FHA does have lending limits on the amount of financing that is allowable and the limits are broken down by state and county. The amounts vary depending upon the type of home. If a homeowner chooses to refinance a mortgage and the total loan amount is over the allowable limit then an FHA home loan refinancing will probably not be feasible. More than likely if a homeowner has a current FHA mortgage he or she should not have any worries when it comes to qualifying for a refinance because they would have been qualified by the first mortgage amount and the amount owed should be much less than it was originally. "The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth" (Psalm 37:21).
Down payment assistance may be something that homeowners can qualify for with FHA home loan refinancing. The criteria that must be met to qualify for assistance includes a good work history, good credit, and the home must be appraised for what the mortgage price is. The buyer and the lender must apply for the program in order to gain approval for the borrower. The buyer must agree to use the funds solely for the purpose of the down payment and the lender must agree to pay all closing costs. The requirements for approval through down payment assistance programs include a maximum dollar amount for both closing costs and down payment. Exceeding this set amount could cause a buyer to be turned down for assistance.
FHA Christian Home RefinanceA viable alternative to foreclosure is FHA home refinance options. Typically, it was quite difficult to refinance a loan to a FHA insured mortgage if it was not already insured. Furthermore, these types of loans were almost always set aside for first time buyers, which refinancing obviously does not include. However, congress passed the HOPE for homeowners act. This act made a provision for homeowners facing foreclosure to take a second mortgage backed by the Federal Home Administration, which was insured and had a fixed rate. This is not an indefinite ruling. The HOPE for homeowners act is only in effect for a limited amount of time before rules and regulations become more restrictive, though this is projected to include over 400,000 homeowners. The benefits of this type of ruling are numerous.
Rather than having to hire another appraiser, deal with a new set of closing costs and potentially accruing a new set of fees, this act allows borrowers facing foreclosure to simply convert their existing loan to an FHA home refinance loan with a 30 year term. Not only do FHA loans carry lower interest rates, but are also insured. Having an insured loan with a lower interest rate just may be the homeowner's ticket to a smaller, more manageable monthly mortgage payment. The borrower considering this type of refinance can borrow up to 90% of the home's appraisal value. This is helpful, as the homeowner may not have that much equity in the home, and would otherwise be penalized through standard lending options.
Not everyone is eligible for FHA home refinance loans. The mortgage payment for the property facing foreclosure must be at least 31% of the borrower's income. This weeds out those homeowners that could otherwise pay the monthly mortgage payment, but choose other items instead. For example, someone may have the income to pay the house payment, but would rather have a boat and motorcycle instead. With this type of imprudent budgeting, the FHA has discovered that the potential borrower is too much of a liability and an unnecessary expenditure of limited government funds. This also appeals to those individual who financed a loan that was ill fitted for her income bracket, or a variable rate loan that increased out of her ability to pay. Limiting the loans to the individual paying more than 31% of his or her income toward mortgage payments also helps the person who has lost his job or has had to take a lesser paying job during times of economic downturn.
The house in question has to be the residence of the potential borrower. FHA home refinance has the same stipulation as the original insured mortgage plan does. The house has to be the primary dwelling for the borrower. The FHA is really an insurance entity constructed to help those families who would not normally qualify for standard lending to buy a home and raise a family. This government administration is not, however, an entity that caters to the needs of real estate investors or individuals in higher income tax brackets. Therefore, FHA home refinance does not cover investment property, rental houses or vacation spots. The potential borrower must actually live in the house. This requirement has to do more with risk and wise lending. The FHA knows that the risk of default is much less when the house is the primary residence. An investor or renter has no loyalty to the bank or lending institution, whereas a homeowner sincerely wants to keep the mortgage in good standing for their credit score and the safety of their family.
The potential borrower must also be able to verify their income, as well as show proof that they never intentionally missed a mortgage payment. Since the FHA home refinance is being insured by a federal establishment, there are only certain funds available. For this reason, the Federal Home Administration wants to find those individuals who are hard working and honest individuals who simply got in over their head. With the subprime housing market falling to pieces, the HOPE for homeowners act is simply a way to reward the diligence of those individuals who were mislead by predatory lenders, and to stop the debacle of the housing market as early as possible.
Even if a potential borrower qualifies for FHA home refinance, it is still up to the lender to approve the loan. The bank may lose money if it allows the mortgage holder to convert to a FHA insured mortgage. However, chances are that the lender will lose less money than if the borrower defaults and the bank forecloses on the house. During a foreclosure, the bank is not getting paid; and during a slow housing market, the lender may be stuck with that property for months or even years. This is a good incentive for the lender to agree to FHA home refinance. However, it is always a good idea to be honest and deal with a lender genuinely, as no bank is required to offer these types of refinancing packages. If it is a good housing market, the borrower facing foreclosure may find it harder to convince their lender to comply with their request.
Because there is a 10% equity built into the loan, the future equity and appreciation of the home will be shared with the Federal Home Administration. This is only fair, as they are responsible for salvaging the home for immanent foreclosure. They were also willing to insure a loan on property for Christians\
that had already been bound for foreclosure. As with all loans, even insured refinancing options should be looked at carefully and compared to all the options to arrive at the most financially beneficial outcome. "Therefore whosoever heareth these sayings of mine, and doeth them, I will liken him unto a wise man, which built his house upon a rock." (Matthew 7:24)