There has been a lot of buzz as of late about a new refinancing initiative that promises to “reduce principal.” While there are many conditions on eligibility, and while as proposed it would only be available to “primary home” borrowers (thus excluding the second home and investment property owners here in the Ocean City Maryland area), it is revolutionary in that it includes principal reduction as one of it’s features:
“Starting September 7, the federal agency will offer new FHA-insured mortgages to certain underwater, non-FHA borrowers who are current on their mortgage payments and whose lenders agree to write off at least 10 percent of the unpaid principal balance.
To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth, be current on their existing mortgage, and occupy the property as their primary residence. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal of at least 500.
Participation in the program is voluntary and requires the consent of all lien holders. The borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance to bring the borrower’s combined loan-to-value ratio to no more than 115 percent.”
If you think you may be eligible, it would be wise to contact your lender for details. The full article –
