The government has been trying to help homeowners through loan modification and refinancing programs for a few years now. However, these existing programs haven’t produced the full outcome as expected. A new program being offered by the Federal Housing Administration (FHA) aims to reach as many as 3 million homeowners through new refinancing conditions.
A Step In The Right Direction
Earlier this week, the Federal Housing Administration announced its plans to cut mortgage insurance premiums for homeowners that refinance their existing FHA loan into a new one. The new refinancing program will contain lower cost loans and significantly reduced mortgage insurance premiums on the new loan. Currently, FHA loan holders pay up to 1.15 percent per year for mortgage insurance premiums, but will be reduced to 0.5 percent per year under the new program.
The FHA is accepting homeowners who are current on their current mortgage, or less than one 30-day late payment. Even underwater homeowners could qualify under this new program, as long as they hold a current FHA insured mortgage that was taken out before June 1, 2009. It is anticipated that up to 3 million homeowners could be eligible for this program, giving the economy a much need boost through consumer spending and increased confidence in mortgage lending.