A short refinance is when a lender accepts less than what is owed on the mortgage to allow the home owner to refinance. Will A Short Refinance Damage My Credit? It depends; unfortunately this question has both a Yes and No answer. The short refinance could show up on your credit as Settled For Less Than Full and may drop your scores 50 -70 points. But in actuality most lenders will report as “Mortgage Paid” after a short refinance, which will actually increase your scores as it has no negative impact, but it all depends on your lender.
How to get mortgage relief? Getting Help With Adjustable Rate Mortgage- Many people will tell you that you should try and refinance into a fixed rate mortgage in order to get some relief from your rising adjustable payments. That works great for people who can actually refinance but does little for the home owner who has a house has lost value or who has a rocky credit report.
How Long Will The Process Take? It depends on your specific lender, but normally you are looking on about 30 – 45 days. The key is to make sure you give the lender everything they need in a timely fashion and continuous follow up with your lender on a daily basis. What Will I Need To Qualify? Once you lenders give you the go ahead to start the Short Refinance procedure, then it’s just a matter of getting qualified for an FHA Loan.
FHA has some of the lowest fixed rates available in today’s market as well as the the highest loan to values which is preferred by most lenders that are participating in short refinances. How Much Will This Cost Me? It depends on the loss mitigation professional that you are working with, but most normally charge about 1% of the new loan amount which is paid at closing and normally the only upfront fee is for the FHA appraisal.
Why Do They Want To Help- Your lender wants to keep you in the home and paying your mortgage. Within the last year foreclosures have risen dramatically and many lenders are losing money, and with each foreclosure more money is lost so it is in their best interest to work with you.
Learn more about Obama Mortgage Relief Plan Qualifications.