Tuesday, April 16, 2013

Home Loan Modification Vs FHA Loan Refinance - Learn the Difference


If you are among the mass of American homeowners stressed due to the current economic downturn, learn what steps to take to be sure your mortgage is covered. You need the facts regarding home loan modification versus FHA refinance from a qualified financial advisor.

Homeowners feeling trapped due to home mortgage loans may benefit from one of two opportunities: loan modification and FHA refinance. The best fit for your particular circumstances depends mainly on which insurer covers your loan. Ask your lender. The big three are Freddie Mac, Fannie Mae, and the FHA (Federal Housing Administration). Congress authorized these organizations to cover home loans in full. Thus lenders minimized exposure to bad debt, while providing you with the benefits of a decent rate.

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There is not much difference between FHA loans, and Fannie Mae/Freddie Mac loans. All that really counts is who covers your loan. This determines your options to restructure your loan to make it more manageable. President Obama's current Making Home Affordable mortgage loan modification works with Fannie Mae and Freddie Mac. The Hope for Homeowners plan allows for refinance of FHA loans.

Many who were previously disqualified for refinance now qualify under Hope for Homeowners. The current drop in home prices made many Americans ineligible for much-needed refinance. Of course, home equity has dropped along with home market values. When values plummeted below twenty percent of equity, traditional refinance became unavailable.

The Making Home Affordable incentives mean predictable steps to a reduced monthly payment via loan modification. These incentives provide payments to borrowers and lenders alike, to increase the number of approved loan modifications while encouraging a stable economy. For FHA-backed borrowers, loan modification is available, though not via MHA. For an FHA loan restructuring, the processes are neither so streamlined, nor so strict.


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