Monday, November 03, 2008

FHA HOPE Program

For more information about this program click here.

The HOPE for Homeowners (H4H) program helps homeowners at risk of default or foreclosure refinance into loan with better terms. The program went into effect October 1, 2008 and runs through September 30, 2011.

You refinance your existing loan into a new 30 year fixed loan.

Here are some basic facts:

1. Your lender has to agree to refinance you through this program. Under the program requirements the loan will be refinanced for 90% of the current appraised value. So, lenders will have to decide whether allowing the refinancing will be financially beneficial. Some may opt for a loan modification instead.

2. You have to be eligible for the program. Here are the requirements:
*The mortgage has to have been done on or before January 1, 2008.
*Your existing payments have to exceed 31% of your monthly gross (before taxes) income.
*You cannot own any other property or have been convicted of fraud with in the last 10 years.
*You cannot have lied about your income or other information in order to get the existing mortgage.

3. The costs are a 3% upfront mortgage insurance premium and a 1.4% annual premium.

4. When you sell the home you will be required to share the equity and home appreciation with FHA. When you refinance using H4H you start out with 10% equity. When you sell you will share a percentage of this equity with FHA. The percentage can be as high as 100% and as low as 50%. It depends on when you sell the home.

In addition, you will share 50% of any home appreciation with FHA. This 50% applies regardless of when you sell the home.

5. The process can take up to 60 days.

6. Interest rates are based on current market rates.

7. You will not be able to take out a second mortgage for the first five years of the H4H loan except for emergency repair circumstances.

Interested in looking into getting an H4H loan? Call your existing lender.

If you are having problems paying your mortgage or anticipate a problem don't wait - call your lender immediately to discuss your situation with them. Most lenders have loss mitigation departments set up to assist you.

The most important thing is to take action - don't be embarrassed.

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