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If you have an FHA loan, a new loan modification program can help you lower your monthly payments.
Lower Your FHA Loan Mortgage Payments
Have an FHA loan? Want to reduce your mortgage payments? Loans backed by the Federal Housing Administration (FHA) will be eligible for payment reductions similar to the Obama administration's loan modification program.
If you are having trouble making your mortgage payments, and you have an FHA insured loan, you can apply for a loan modification in a program similar to the Making Home Affordable program. This new FHA loan modification program can help you lower your monthly mortgage payments and avoid foreclosure.
How this New Program Will Reduce FHA Loan Payments
By law, the FHA cannot offer interest rates that are available the Obama loan modification plan - which can be as low as 2 percent.
With this new plan, the FHA will allow those with an FHA loan to set aside as much as 30 percent of the total principal balance until the property is sold or refinanced. No interest will be applied to that amount.
By setting aside, interest-free, a third of the principle remaining on your FHA loan, your monthly mortgage payments will be significantly reduced. If the total principle you owe on your FHA loan is $90,000, for example, this new plan will set aside $30,000 of that principle. Now your monthly payments will be based on a principle balance of $60,000, making those payments much smaller.
This new plan will not change the interest rate of your FHA loan. Your existing FHA loan rate will be applied to a lower principle, which in turn lowers your monthly payment.
For more information, visit www.makinghomeaffordable.gov
Refinance Your FHA Mortgage Instead of Modify
If you haven't been more than 30 days late on your mortgage payment in the last 12 months then most likely you will quailfy for the FHA Streamline Refinance program. The FHA created this program to help FHA borrowers refinance quickly; it actually requires less paperwork and less time than the current loan modification program. For more details, see this article titled: FHA Streamline Refinance. It discusses in detail the FHA Streamline Refinance program that FHA has had in place for over 25 years. After you read that article, if you have any questions, then read the FAQ: FHA Streamline Refinance FAQ.
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