Many people in California currently owe more than their home is worth – sometimes hundreds of thousands of dollars more. Most of these people have been looking for a solution that will help them get their loan amount down to at least what the house is worth – and they the only option they are aware of is Loan Modification.
Sound familiar?
What many people don’t know is that there is actually a way better solution to this problem than loan modification – it is called an FHA short refinance. An FHA short refinance works much like a short sale – except that you get to keep the house rather than sell it to someone else.
If you think that the FHA short refinance program might be right for you, the first step is to get on the phone with your lender and tell them that you are interested in SHORT SELLING your home. Once they hear that, they will usually transfer you to the loss mitigation department – which is the right one.
Once you get to the loss mitigation department, you want to negotiate for something called a SHORT PAYOFF – which means that the lender will agree to accept less than you currently owe. If they say they won’t allow short payoffs, then ask them what they are doing when they accept a SHORT SALE.
No matter what – don’t take NO for an answer! Many times (most of the time) the lender will give you a different answer depending on who you talk to. If you don’t get the answer you want – just try back the next day and speak with someone else.
Once you get the SHORT PAYOFF, then you should be able to get any FHA loan officer to help you get a new FHA loan for that amount – and easier than you can say the words “loan modification”, you will have a new fixed rate FHA loan that is 95% of what your home is now worth.
Don’t give up! A FHA short refinance can be a much better long term solution than a loan modification.
