The government just announced another mortgage refinance program in hopes to aid underwater homeowners. The new program is called The FHA Short Refinance Option and it allows borrowers to refinance up to 97.75% of their home's value. However, a borrower's current lender must be willing to write down at least 10% of the current principal balance and the total mortgage debt on the property can not exceed 115% of the home's value.
A borrower must meet the below criteria to qualify:
- Be current on payments for their underwater mortgage
- Refinance their primary residence
- Have a mortgage debt-to-income ratio of less than 31 percent
- Have a total debt-to-income ratio of less than 50 percent after the refinance
- Have a credit score of at least 500
For more information on the program please vist the HUD website.