As home prices continue to decline in certain markets, home owners with adjusting interest rates face the obstacle of not being able to refinance due to their mortgage balance exceeding the value of their property.
The FHA Short Refinance program may be able to help if you are in this scenario.
There are a few options available when considering a FHA Short Refinance:
1. Short Refinance – Also phrases as a Mortgage Write Down, the short refinance is the process of negotiating with your current mortgage lender to allow them to accept a payoff less than you currently owe. Since banks are not excited about acquiring new property, they may be willing to look at this option knowing that they would have to sell the property for less if they were to proceed with a foreclosure.
2. FHA Secure Refinance – In the case that you have a first and second mortgage, the FHA Secure Refinance would allow for the second lien to be subordinated while the first mortgage was refinanced at a lower loan amount.
3. FHA Secure Short Refinance – Through a process of negotiating with your current lender, there is a possibility that a deal could be put together where they would write off a portion of the outstanding mortgage balance and arrange for the remaining unsecured debt to paid with new terms and rates. This would help the bank in the fact that they are not at a complete loss on the total amount owed.
With any of the above options, it is important that you seek the help of an experience professional who knows how to work with lenders for a win win scenario.