Bad Credit Mortgages Help

There are some big changes happening in the mortgage industry that will directly effect those that have FHA mortgages or for those who are seeking out one.  The biggest change that will happen Nov 18th 2009 is that FHA streamline refinance loans will be taken away.  We know, this is a huge change and it will effect many people.  Why is this big and how will it affect you?

The biggest thing by having these loans taken away is that if you have an FHA loan you will now have to get an appraisal done and prove your income.  This was the biggest draw to FHA streamlines is that they didn’t require an appraisal or income verification.  With a streamline you could essentially just reset your FHA interest rate without adding to your loan amount.  Now you must get an appraisal, which can be a big issue because most properties have declined in value which means that you might not be able to refinance anymore because your house is worth less than what you owe on it. 

Why are these programs being taken away?  The main reason is that out of all the streamlines FHA owns 20% are delinquent.  This is bad for their portfolio especially as they are trying to stay afloat.  Because of these bad ratios these loans are being discontinued.

What this means is that it is more important than ever to have good credit scores.  Without these and proper income verification you can forget about refinancing or getting a loan. If you have bad credit make sure you do some credit repair to get yourself back on your feet.   Of course all hope is not lost by losing the Streamline option of an FHA product, it just simply means that you must be better prepared to be able to refinance your home.

Another change in the industry is happening the first of the year in 2010.  Brokers will no longer be able to accept YSP from lenders, which means that many if not all brokers will be closing their doors this year.  This means that the power and control will be completely in the banks hands.  If you have not refinanced your home we would suggest doing it right away as rates are still low.  As soon as this power change happens we will see rates skyrocket back into the 8′s and 9′s we saw a few years ago.  The reason we tell you about these changes is so that you can prepare yourself for the future and be able to continue to get lending on your home or future real estate purchases.