TheTruthAboutMortgage.com reported a sneak peak on a new FHA loan that will serve the same purpose as the Fannie Refi Plus. In case you do not remember what the Refi Plus did, check out a previous post of mine called Fannie Refi or Refinance Plus.
This FHA loan that is on the horizon will allow familes to refinance their home who have 1st and 2nd liens, where the combined loan values added together exceed the actual appraised value of the home. There are still a good number of families out there with 6.25% or higher interest rates on their first loan, and 7% or greater rates on their 2nd loan that can no capitalize on the low rates. This is good, not just for lowering their monthly payment, but a lot of families that used 2nd liens, chose balloons because they figured they’d get the lower payments that come with the balloons, and later they would just refinance out before the amount came due. Most of these folks did not think that the value of their home would drop, and they wouldn’t have the equity to refinance and roll in costs, and with the economy where it is, most families can’t afford to come out of pocket for refinance costs, and pay down the principle to meet loan to value guidelines.