November 29, 2010
In 2010, the FHA made changes to its refinance program to let borrowers who owe more on conventional home loans apply for something commonly known as the FHA Short Refinance program. These FHA refinancing loans are an important option for borrowers who find themselves in difficult financial situations and know they can’t avoid foreclosure by selling the home.
An FHA Short Refinancing loan makes a lot of sense for borrowers in this position. But what does it take to qualify for the loan?
To begin, these loans are not for those currently holding an FHA mortgage. The FHA short refinance program is specifically for those with conventional loans.
The homeowner must be in what the FHA calls a “negative equity position” which simply means the borrower owes more on the home than it could sell for on the market. Applicants must be living on the property as the primary residence; summer homes do not qualify for this refinancing.
The rules also list specific credit requirements. According to the FHA, “The homeowner must qualify for the new loan under standard FHA underwriting requirements and possess a