What is the FHASecure refinance program?

Under the new “FHASecure” refinance program, FHA will allow families with acceptable credit histories who had been making timely mortgage payments before the interest rate on their adjustable rate mortgages reset-but are now in default-to qualify for refinancing to an FHA mortgage.

The basic requirements of the FHASecure program are:

*The mortgage being refinanced must be a non-FHA Adjustable Rate Mortgage (ARM) and the interest rate has reset.

*The homeowner is now delinquent in making payments on the mortgage after the reset.

* The homeowner’s payment history must show that, prior to the reset of the interest rate on the mortgage, the homeowner was current in making the monthly mortgage payments, i.e., the homeowner’s mortgage payment history during the 6 months prior to the interest rate reset showed no instances of making mortgage payments outside the month due.

* The homeowner has sufficient income to qualify for an FHA mortgage.

If there is sufficient equity in the home, FHA will allow missed mortgage payments to be included in the FHA refinance mortgage, if the arrearages arose after the interest rate reset or the homeowner may be able to use a second mortgage to finance the missed payments.

To learn more about the FHASecure program go to the following HUD website: http://www.fha.gov/Homeowners should contact their mortgage lender to see if they qualify for the FHASecure program or find an FHA lender in their area by going to the following HUD website: http://www.hud.gov/ll/code/llplcrit.html

What are the advantages of refinancing to a fixed rate FHA mortgage?

There are significant advantages to refinancing to an FHA mortgage with a fixed interest rate, particularly if you currently have a higher cost mortgage or have a mortgage that has an adjustable or a variable interest rate, optional payments or interest only payments that will increase in the near future. Borrowers with adjustable or variable interest rate mortgages or interest only payment mortgages often encounter much higher monthly payments (“payment shock”) after having the mortgage for just a few years.

FHA fixed interest rate mortgages cost less. FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a subprime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments.

You don’t have to have perfect credit to get an FHA fixed rate mortgage. Even if you have had credit problems, such as a bankruptcy, you may still qualify for an FHA mortgage. Should you encounter hard times after refinancing your home, FHA has programs to help you keep you in your home and avoid foreclosure.

FHA does not provide direct financing nor does it set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders.

An FHA fixed interest rate mortgage may be used to refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation).

HUD’s internet site can provide additional information on FHA mortgages by going to: http://www.hud.gov/buying/index.cfm

You can also find an FHA approved lender in your area by going to: http://www.hud.gov/ll/code/llplcrit.html

You may also wish to contact a HUD approved housing counseling agency in your area for unbiased and free counseling on your particular situation. You can find a list of these agencies at http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

What foreclosure prevention options are available on non-FHA insured mortgages?

1. Contact your lender if you are behind in your mortgage payments.

2. A good deal of information which HUD provides may apply to individuals that have a VA or conventional loan who are in danger of losing their homes. Visit http://www.hud.gov/foreclosure/index.cfm for more information.

3. Contact a HUD-approved housing counseling agency and they will help you assess your financial situation, determine what options are available to you, and help you negotiate with your lender.

To find a HUD-approved housing counseling agency call 800-569-4287 on weekdays between 9:00 am and 5:00 pm (EST). To obtain a list of HUD-approved agencies including their national affiliates, and find more information regarding avoiding foreclosure, visit http://www.hud.gov/offices/hsg/sfh/econ/econ.cfm#2.

DISCLAIMER: All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

How can FHA help me buy a home?

FHA insured mortgages offer many benefits and protections that only come with FHA:

Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

Less than Perfect Credit: You don’t have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA loan than a conventional loan.

Low Down Payment: FHA loans have a low 3% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don’t allow this.

Costs Less: FHA loans have competitive interest rates because the Federal government insures the loans. Always compare an FHA loan with other loan types.

Helps You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.

FHA does not provide direct financing nor does it set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. In order to initiate the loan application process, please contact an FHA approved lender.

An FHA insured mortgage may be used to purchase or refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation).

HUD’s internet site can provide additional information on FHA mortgages by going to: http://www.hud.gov/buying/index.cfm

You can also find an FHA approved lender in your area by going to: http://www.hud.gov/ll/code/llplcrit.html

You may also wish to contact a HUD approved housing counseling agency in your area for unbiased and free counseling on your particular situation. You can find a list of these agencies at http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

There are also many local and State government programs available that use HUD and/or non-HUD funds to provide grants for the down-payment or to help pay closing costs. To find out what programs are available in your area visit http://www.hud.gov/buying/localbuying.cfm

Finally, if you would like to see a short web-cast video about the home-buying process, visit the following web site: http://www.hud.gov/webcasts/archives/buying.cfm.