On March 26th, 2010, the Obama administration announced that they are making adjustments to the FHA procedures which will provide refinancing options for homeowners who more on their home than it is worth.

From the Housing Urban Development (HUD) website:

"Today, as part of its ongoing commitment to continuously improve housing relief efforts, the Administration announced adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs. These program adjustments will better assist responsible homeowners who have been affected by the economic crisis through no fault of their own. The program modifications will expand flexibility for mortgage servicers and originators to assist more unemployed homeowners and to help more people who owe more on their mortgage than their home is worth because their local markets saw large declines in home values. These changes will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012. Costs will be shared between the private sector and the Federal Government; the Federal cost of these changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP)."

This will provide an option for qualifying homeowners who owe more than their home is worth to be refinanced into a FHA loan as long as they are current on their mortgage and their lender reduces their total mortgage debt by at least 10% of the loan amount. The new FHA loan will have a balance closer to the current value of the home-giving homeowners a path to regain equity in their homes and an affordable monthly payment.

Example of a typical FHA refinance:

  • In 2006: Family A took out a 30-year fixed mortgage with a balance of $250,000 and an interest rate of 9.0%. Their monthly payment was about $2,000.
  • Today: Home prices have dropped and Family A's home is worth $180,000
  • With a FHA Refinance: Family A's loan balance will be reduced to $207,000 and their monthly payment will fall to about $1300 per month. This will reduce their principle balance by $33,000 and reduce their monthly payments by $700 per month, saving the family nearly $42,000 over the next 5 years.

There are many stipulations in regards to who qualifies for this program, so please call us today at 425-413-6428 or email us at info@HappyHomeTeam.com to find out if you qualify.