The new NV FHA Short Refinance program that becomes effective in September 2010 is intended to help homeowners who are upside-down on their mortgage. That is, they owe more on their home than it is currently worth. The Administration hopes this program will help three-to-four million homeowners to stay in their homes over the next few years. The basic ingredients of the FHA Short Refinance option are. The property must be the homeowner?s primary residence.
Popular first time home buyer programs include Fannie Mae financing, FHA loans, VA loans and various programs offered through HUD. Home buyers might also be eligible for the Worker, Homeownership and Business Assistance Act which provides an $8000 first time home buyer tax credit toward real estate purchased by April 30, 2010. The Recovery Act also grants up to $6500 in tax credits to homeowners that have resided in their home for a minimum of five years and ready to move into a higher priced property.
To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives ($500) to existing second lien holders who agree to full or partial extinguishment of the liens. While well-intended, the program has several problems that are likely to limit its usefulness. First, if a borrower is current on his loan, how will the lender justify a principal reduction to the note investors? What is their incentive? Second, many properties have a second lien ? why would the second lender agree to eat a principal reduction ? and perhaps a large one at that ? unless the property is in imminent danger of foreclosure?
Advantages to the Seller- Allows the home to sell to more buyers if it wouldn?t qualify for a standard FHA loan- Repairs being rolled into the loan and not requiring seller to make repairs out of pocket prior to close.- Not having to go off and on the market due to not passing an FHA appraisal.
One day, lenders will have to step up to the reality that the best way to revive the real estate market is to re-value properties at their current market worth. Otherwise, it will continue to be a long road of short sales, foreclosures, bankruptcies and strategic defaults?all of which accomplish the same thing, but in a much more painful, expensive and longer fashion. Perhaps the implementation of judicial cram-downs is ultimately the only way to instill sense in this whole mess. For more information on NV FHA loans, check with your local Mortgage company.
Want to find out more about NV FHA, then visit Kate Bailey?s site on how to choose the best NV FHA loan for your needs.
Source: http://thebestmortgageloan.com/mortgage/nv-fha-short-refinance
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