Hope for Homeowner's Updates

On November 19, 2008 the United States Department of Housing and Urban Development announced changes to the current Hope For Homeowners (H4H) program that will allow more homeowners to refinance current mortgage loans into affordable FHA backed mortgages. HUD secretary Steve Preston stated that, “These modifications should increase lender participation and help more families who are having difficulty paying their existing mortgages, but can afford a new affordable loan insured by HUD’s Federal Housing Administration.”

Among the changes to the program are an increase in the loan to value ratio, changes in the way lienholders are paid, and extensions of the term of the mortgage. The announced increase in the loan to value ratio in the Hope For Homeowners program is now 96.5%. The loan to value ratio is the relationship between the principal remaining on the mortgage loan and the total value of the property. In other words if you owe $85,000 on a $100,000 property your loan to value ratio is 85%. This increase will make the Hope For Homeowners program available to more homeowners.

However, this increase will only be available to homeowners whose mortgage payment is not more than 31% of their monthly income and whose household debt (other monthly bills) is not more than 43% of their monthly income. For homeowners whose debt is greater than these amounts the loan to value ratio will remain at 90%. In order for a home to be refinanced, as in the case for the Hope For Homeowners program, all liens on a home must be lifted. Under the previous H4H guidelines, lienholders who released their liens were only able to recover a small amount of the money owed upon the sale of the home.

Under the new guidelines, lienholders may receive an immediate payment at the time the Hope For Homeowners loan is originated. This change will encourage more lienholders to lift liens on a home, allowing more homeowners the opportunity to use the Hope For Homeowners program. Lastly, the Hope For Homeowners program will now allow for a 40 year mortgage term, as opposed to the previous 30 year term. This extension will reduce the overall monthly payment allowing more homeowners to take advantage of the H4H program. All other Hope For Homeowners requirements remain in effect.

Article Source: http://www.realestatepropertyarticles.com.

About the Author:
Brandon is a mortgage blogger for Mortgage Loan Place.com. He specializes in writing about government mortgage programs including VA Mortgages and FHA Loans.