Refi your Subprime ARM into an FHA Loan

Last week, President Bush introduced a plan called the FHA Secure Initiative. This plan will enable homeowners to refinance various types of ARMs that have recently reset, and/or are delinquent into FHA loans. A Federal Housing Authority (FHA) mortgage is a government insured loan. Since it is backed by the government, the rates and terms are usually much more favorable than a regular conventional or subprime mortgage. These loan also have FIXED rate 30 year terms.

This is important news for homeowners out there that have ARMs that are due to reset or are currently struggling to pay the higher interest rate on ARMs that have already reset.

Here are the important points of the program:
- The mortgage being refinanced must be a non-FHA ARM that has reset.
- The mortgage payment history, during the 6 months PRIOR to the reset must show no late payments.
- Late payments made after the loan has reset ARE acceptable.
- In many cases homeowners may wrap late mortgage payments into the new loan.
- There must be sufficient equity for FHA to insure the mortgages that include missing mortgage payments.

This temporary initiative will expired on December 31st, 2008. Please contact me for more details if you feel you can benefit from this exciting initiative.

Where did all of the Mortgages Go?

The subprime crisis has been all over the news for the past few months. Every week, it seems like a handful of former high-flying mortgage companies are either shutting down operations or laying off numerous employees.

This has caused a ripple effect throughout the industry and it is now harder than ever to acquire a home mortgage. Many programs that once ruled during the real estate boom are now no longer available. Many lenders are also increasing minimum credit score requirements and getting rid of "state-income" and "no-doc" loans. Nowadays the majorities of buyers have to possess good credit, low debt to income ratios, a healthy down payment, verifiable income, and be looking to finance less than $417,000.

There are still many good programs out there but you really need to search hard for them. The best advice for someone looking to refinance in the near future is to pay your mortgage on time. Late mortgage payments (within the last 12 months) in this market will almost guarantee that you will not qualify for ANY loan.