If you have a mortgage secured by the Federal Housing Administration (FHA) and have not yet taken advantage of low interest rates, you may qualify to participate in the “FHA streamline refinance” program, even if you have declared bankruptcy. It does not matter if you have reported Chapter 7 or Chapter 13- if you have not completed a long time and have acted responsibly since filing, you may be eligible.
FHA Rules Refinance Streamline
According to the Department of Housing and Urban Development, a homeowner who has a FHA-backed loan can participate in the program to rationalize after bankruptcy if a minimum of 12 to 24 months has passed from the United States. Two years is the rule of thumb, but if a borrower can show that the bankruptcy was caused by extenuating circumstances, he can qualify after only 12 months. The borrower must have demonstrated the greatest financial responsibility since filing and must also demonstrate that bankruptcy is not likely to recur.
Streamline rules for additional refinancing
The FHA has been refinancing streamline since the 1980s, according to the HUD website. To participate, in addition to the bankruptcy rules, the initial must of the mortgage “be already insured FHA” and more than six months. In addition, the loan must be up to date and must be used to lower the monthly payment. Borrowers cannot take money out of the house to pay debts or make major renovations, although there is currently a program that will allow the borrower to take between $ 5,000 and $ 35,000 to make minor modifications or repairs to the property. Strict rules apply.
Benefits of FHA streamline refinance
FHA streamline refinance is easy for borrowers because there is little administrative work. The house does not have to be reevaluated if the borrower is refinancing the original loan amount. (It must be appreciated if the borrower rolls the closing costs into the new loan.) This is a major plus if you think you might need more than it’s worth. You may also not have to provide an income verification or credit history unless your lender requires.
Preparation of Refinancing
Although it is easier to qualify for FHA streamline refinance than other loan products, it does not hurt to get ready. Order your credit reports and review them carefully to make sure that the items included in the bankruptcy have been reported correctly. Make sure you pay the monthly obligations on time and in full so long since your bankruptcy and you’ve been in charge since, you’re probably in good shape. Do not forget to save money towards the closing costs to avoid the evaluation.
Not a single person or entity can hold more than 10 percent of the units in the complex and the complex can not obtain FHA approval if more than 15 percent of condo owners are late in their dues to the association of condo. The FHA also limits its overall exposure to each condo complex as loan insurance on up to 30 percent of the shares in a condo complex. The condo association must have cash reserves equal to at least 10 percent of its annual budget to cover maintenance and repairs.
The FHA guidelines for condos seem very restrictive, but by comparison, Freddie Mac and Fannie Mae buy mortgages attached to condo units if the complex as a whole has an owner occupancy rate of over 70 percent. In addition, people who take FHA-backed loans have only to pay installments of only 3.5 percent. Many other lenders require down payments of more than 20 percent on condominium projects. Therefore, FHA loans are one of the best alternatives to money when it comes to buying condos.