Friday, January 04, 2008

Avoid Foreclosure With The Fha Secure Loan

By Greg Lietz

Since the housing bubble has burst and the economy is at risk for a variety of factors, many people are finding themselves in trouble. Many of these people got mortgages that were adjustable-rate mortgages, for example. With rate increases becoming more and more common, these folks now cannot make mortgage payments on time or in full. However, even for someone in this situation, there's a new option, called the FHA Secure Loan.

In October 2007, President Bush announced that a new loan, the FHA Secure Refinance Loan, would be offered. This loan is designed to help homeowners in danger of defaulting on payments or facing foreclosure to avoid just that. This new product, FHASecure, is meant to help people suddenly facing higher mortgage payments they may not be able to meet. FHASecure does require escrow for both taxes and insurance, and provides much-needed assistance for people who wish to avoid foreclosing.

Benefits of the FHA Secure Loan

There are several benefits on offer with the FHA Secure Loan, and details of just a few of these are listed below.

Benefit #1 - Prevention of Foreclosure - This is perhaps the main benefit homeowners can expect with the FHA Secure Loan. Instead of facing foreclosure because of current economic events beyond your control, if you have a good payment history in the past, FHASecure can help you keep your home.

Benefit #2 - There are No Prepayment Penalties - Another great benefit for homeowners is that the FHA Secure Loan, unlike other loans, is available without any prepayment penalties if you pay off the loan early. The FHA is fully aware that the last thing people can cope with is having more financial problems to face at an already difficult time.

Benefit #3 - Keep Your Good Credit - Of course, if you have to foreclose on your home, it can mean major damage to an otherwise good credit report. It can also create problems that you will carry with you into the future. You might have difficulty purchasing another home, getting a credit card, or even renting an apartment. However, the FHA Secure Refinance Loan helps you avoid just this type of situation by letting you sidestep foreclosure and keep your good credit.

FHA Secure Loan - Criteria To Be Met

The FHA Secure Loan is not something every homeowner can qualify for. To do so, you have to meet the following five criteria:

1. You must have a good history of making timely payments prior to the date the original rate expired when the loan was re-established.

2. A history of sustained employment showing you can meet the requirements to pay off the new loan is necessary.

3. You must also be able to prove not only that you are in employment but that you actually earn enough money each month to meet the new loan payments.

4. At least 3% of the loan amount either in cash or equity in the property has to be provided by the applicant.

5. Last of all, the homeowner must also be able to prove that their interest rates have been reset after June of 2005, or that they will be reset before December of 2009 in order to qualify for this new loan.

The FHA Secure Loan aims to provide a much needed break for borrowers who have been good business for lenders in the past, but due to rates changing, are having problems repaying their mortgage at the present time. The new FHA Secure Loan will inject liquidity into a mortgage market which has been struggling over the past twelve months and similar products insured by the FHA from other lenders are likely to appear on the market in the near future. So, for those finding themselves on the verge of foreclosure, the FHA Secure Loan is the lifeline they have been desperately looking for to save the day, as well as saving their home.

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