mortgage

FHA changes home mortgage rules

Eligibility of underwater homeowners
Eligibility of underwater homeowners

FHA refinancing loans are now available to greater numbers of homeowners who owe more than their homes are worth.

Old rules: Some underwater borrowers were able to qualify for FHA refinancing loans.

New rules: The pool of such borrowers has been expanded with more concrete underwriting requirements and nonmonetary incentives to lenders who participate.

Homeowners may be eligible if all of the following apply:

  • Are trading a non-FHA mortgage for an FHA mortgage.
  • Have a credit score above 499.
  • Are current on the mortgage.
  • Can get the lender or investor to write off at least 10 percent of the old loan.
  • Are financing no more than 97.75 percent of the home's value.

What you need to know: This temporary program is now in effect. The new rules expire in December 2012. So if you're considering FHA refinancing, you want to act before then.

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