Possible Relief for Underwater Homeowners...FHA Short Refinance Option

Whether you're upside down, over your head, or in the FHA's eyes "underwater" in your home mortgage, the future may look a little brighter come September.

The FHA released details recently on its Short Refinance option to help those homeowners who owe more than their home is worth.  Starting September 7, 2010, the FHA will offer certain "underwater" non-FHA borrowers the chance to qualify for a new FHA-insured mortgage...as long as you are current on your existing mortgage and the lender agrees to write off at least 10% of the unpaid principal of the first mortgage.  In addition to that, you must also meet the following criteria:

• Must qualify for new loan under FHA underwriting requirements
• Must have a credit score equal or greater than 500
• The property must be the homeowner's primary residence
• The refinanced FHA loan must have a loan-to-value ratio of no more than 97.75%

The program is meant to reach out to those individuals that fell "underwater" due to the large declines in home values in their local markets, it should provide some much needed relief and help the government stabilize the market through the next two years.

To see if you may be eligible, contact your lender or mortgage professional.