A short refin is a transaction in which the lender agrees to refinance the borrower's home for the current market value, essentially making it more cost-effective for the borrower. The lender agrees to replace the lender with the new one and pay the difference. These new loans usually have lower balances and borrowers usually receive new interest rates, which are often lower than the previous ones - resulting in reduced mortgage payments.
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Short refinancing occurs when the borrower's loan balance is more than the value of the property. This is often caused by a market decline, as in the recession of 2009, which emphasizes the ability of the financial system to provide mortgage loans, which then limit the ability of Americans to refinance mortgages and buy homes.
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Advantages of short refinancing
Borrowers avoid confiscation and defend their home. Banks take less losses than with foreclosure.
Difficulty
The hardest part of getting a short refinance is getting a lender to approve it, as it is often considered a risky transaction and since it takes months to get a short refinance and there is no guarantee the borrower will accept it. If the borrowing bank does not approve a short refinance, its credit will not be negatively affected. In this sense, short refinancing is no better than short sales. However, this is a far better outcome than letting someone's property be confiscated. A short sale can affect a person's credit as small as 50 points compared to a foreclosure that could affect your credit by 300 points. A deed as a substitute or foreclosure has a far more destructive effect on a person's credit. In addition, short sales or short refinancing will be recorded with the credit bureau as paid in full or underpaid. It is common for homeowners to get incorrect information by real estate professionals who are not familiar with FHA guides that short sales or short financing are no different from foreclosures, but this is not true according to HUD. In fact, if the borrower follows the FHA guidelines, they can qualify for a new FHA purchase on the first day after a short sale.
However, this is not the case with Making Home Affordable Programs through the federal government. When using the Affordable Housed Alternative Program (HAFA), short sales and Substitute Actions will not adversely affect your credit report like any other program or option. From the Making Home Affordable website: "Unlike conventional short sales, HAFA's short sale completely relieves you of your mortgage debt after selling the property.This means you will no longer be responsible for the" fall "short amount of the amount you still "The drawback is guaranteed to be released by service providers. In short HAFA sales, your mortgage company works with you to determine acceptable selling prices. HAFA has a less negative effect on your credit score than conventional seizure or conventional sales. "Homeowners can take advantage of special negotiators to ensure their rights are protected.
New FHA guide
However, the new Federal Housing Administration's refinancing options implemented earlier this month make it easier for borrowers to refinance their homes. This new guide was developed to help borrowers with negative equity. New guides are developed to help borrowers who fail on their loans not because of their own fault. The new modifications give you more flexibility for mortgage servicers (people you contact if you have questions about your mortgage loan account) as well as to the originators to help unemployed homeowners. This change is funded with $ 50 billion allocated to the housing program by the Asset Problem Assistance Program. These programs are developed to help responsible homeowners, such as those who continue to make timely payments, to avoid foreclosure. The current mortgage lender home loan borrower is under no government requirement to pay a short repayment payment which is why most borrowers find it beneficial to hire a mortgage broker who employs a special negotiator to take care of short negotiations for Borrowers. Once an agreement is reached, the new FHA creditor will be required to refinance the loan.
References
External links
- http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-05
- http://www.zillow.com/blog/mortgage/2010/03/29/fha-short-refinance-does-this-make-it-real/
- http://www.governmentrefinanceassistance.com/editorial-predictions-on-how-the-new-short-refinance-program-will-work-in-practice/
- http://www.thetruthaboutmortgage.com/what-is-a-short-refinance/
Source of the article : Wikipedia
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