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| Hope For Homeowners (H4H): Refinancing For Homeowners With Reduced Income Hope For Homeowners is a refinancing program created in 2008 to help homeowners avoid foreclosure. The new loan is a 30-year fixed rate mortgage that is insured by the Federal Housing Administration (FHA). H4H program ends on September 30, 2011. Some of the features of Hope For Homeowners are:
A new appraisal has to be conducted and the new loan will be set at 90% of the appraised value. This amount excludes closing costs. If there are two mortgages on the property, both mortgages will be rolled into the new mortgage. If the homeowner needs to obtain another second mortgage, this can not be accomplished until after five years. There is a mortgage insurance premium of 2% which has to be paid upfront, and the annual premium of 1.5% of the outstanding balance can be added to the monthly mortgage payments. The closing fees can be paid upfront or added to the mortgage. You will be given a Good Faith Estimate. However, the 90% loan to value rule still applies. One of the original features of the H4H program was the sharing of equity. The homeowner had to agree to share both the equity created at the beginning of the new mortgage and a portion of any future appreciation in the value of the property. Thankfully this is one of the many amendments made to the program. The shared appreciation has been eliminated and the shared equity has been replaced by an exit premium. Homeowners are still not happy with this feature of the program. The interest rate is the current market rate at the time. There are no special deals on the rates. Overall, the program seems to be expensive and very prohibitive. The benefits to the homeowner is minimal. If the homeowner has the upfront mortgage insurance premiums he can bring his payments up-to-date. This program is limited. The homeowner who would benefit from the H4H program is someone who is underwater with their mortgage. If the mortgage balance is $300,000, and the appraised value of the house is only $250,000, then this homeowner has very little chance of ever building equity over the next five to ten years. Finally, there is a requirement that if there are two lien holders, a first and a second, they both must agree to release their liens. This is okay for the first. But what about the second. What is in it for him? Readers of this article also enjoyed: Your Mortgage Approval In 9 Easy Steps When To Get A Second Mortgage |
| FHA Financing On Homes Owned Less Than 90 Days HUD Secretary Shaun Donovan announced that FHA financing will be available on homes owned for less than 90 days. This provides an opportunity for easy financing of foreclosed houses. FHA research showed that, purchasing, rehabilitating and reselling foreclosed houses takes less than 90 days. The FHA also realized that this segment of the housing market was one of the few areas where someone could get an affordable home. So it is a great strategy designed to make the financing process easier. There are plenty of buyers, but they can't get financing, because of the credit crunch and the housing crisis. Originally, the 90 day "seasoning" rule was designed to curtail excessive flipping by speculators. This is a moot point because we currently have a glut of foreclosed houses on the market. This rule change will be good for one year, but could be extended or withdrawn. The effective date is February 1, 2010. We see a win-win situation for all parties involved. Many first-time buyers can get a home, many communities with abandoned houses will see some economic activities return to the neighborhood, and the lenders and bankers can get more properties off their books. |
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