Many homeowners were dissatisfied with the strict eligibility criterion’s of the home affordable refinance program and so the new FHA short refinance program was an attempt to help those homeowners who could not qualify for the making home affordable programs. The FHA short refinance program was mainly meant for those homeowners who were underwater mortgage holders that is those who had negative equity in their homes. Due to recession the housing market suffered a great jolt and the process spiraled down at a fast pace and it is this that affected the equity of homes and turned it into negative equity. Most of the mortgage lenders were hesitant of approving the home affordable refinance program applications of underwater mortgage holders as they considered it risky to negotiate rates on the loan for those homeowners who did not have any security in the form of equity also. However, as per the new FHA short refinance program the Government initiated and helped struggling homeowners who had negative equity in their homes but could still qualify for the FHA short refinance program.
The eligibility criterion for qualifying for the FHA short refinance program were:
- Need to have negative equity in their homes and should have steady income.
- The homeowners should be current on their home loan payments and the property should be the primary residence of the homeowner.
- A decent credit score of minimum 500 points can help the homeowner qualify for the FHA short refinance program easily and it is important to fulfill the FHA underwriting guidelines. Under the FHA streamline refinance guideline program, the FHA underwriting scheme is more flexible and streamlined. There is less strict requirements of necessary documentation and the entire process is more streamlined.
- The loan to value ratio should be less than 97.5%. However, if the homeowner has 2 mortgages then the LTV should be less than 115%.
- Homeowners should have FHA insured loan and only then, they will be able to qualify for the new FHA short refinance program.
- The mortgage service provider should agree to write off around 10% of the outstanding balance on the home loan.
No doc mortgage refinance is one option that can be availed by homeowners struggling to get their mortgage refinance application approved, as under no doc mortgage refinance the individual will not have to provide no documents on the No doc mortgage refinance application request.
The making home affordable program and its branches namely home affordable refinance program, home affordable modification program, FHA streamline refinance plan, FHA short refinance program, no doc mortgage refinance have helped numerous homeowners from losing out their homes and saving it from foreclosure.