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Underwater FHA Mortgage

Hi,

    My house is currently underwater about $40k. We purchased the house back in Oct 09 so we missed out on the HARP and FHA Streamline refi programs with endorsement date after June 1st 2009.

Is there anything that can be done for us? Our current rate is 5.75%.
Mortgage balance $170k
House estimated $130k

Thank you

-Stressed
  • October 15 2012 - Worcester
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Answers (3)

You need to see if a new loan at current rates would have benefits or not.  You need to pass a Net Tanigible Benefits (TNB) for FHA to allow you to refinance.  What will happen is your monthly principal and interest payment will decrease greatly by coming down from such a high rate.  Unfortunately the monthly temporary MI will increase.  This will not offset some of the savings but you will still see a nice monthly saving.  Once the MI comes off after 60 payments and the loan amount being at 78% LTV you will see even more savings then the loan you are currently in.  I would say 9 out of 10 people that make the NTB test end up doing this streamline because they are just fantastic loans and you would be crazy not to get one at the rates they are at right now!  Also just an FYI starting next year FHA is changing the guidelines to make it so you have MI for the full loan term and not just the first 60 payments!  So hurry and try and get qualified now under the current guidelines.
Best of luck!

  • December 11 2012
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A traditional FHA streamline is an option for you. Even though the new PMI is higher becasue you missed the endorsment date the interest rates are low enough that it may not make that much of a difference. There is no costs to you on a streamline. I would be happy to run a scenario for you and get the numbers in black in white so you can see if it makes sense for yoou. Please call or email me anytime to talk more.
Ed

  • December 06 2012
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There may be some hope. Look into a regular FHA Streamline and see if it would make sense.  Perhaps the drop in interest rate will be enough to offset the increase in the monthly and upfront MI.   
  • October 15 2012
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