How housing rescue bill can help you II
Continuing from the last post about the benefit and eligibility to get a FHA-backed housing loan…………You will need approval from the FHA to become eligible for the mortgage under the new housing rescue bill. The total money that you can get under this scheme cannot be more than 95% of the appraised value of your home at the time.
How can I apply?
You can do two things-
Contact your current mortgage servicer or
Contact an FHA-approved lender. The names of such lenders are available on the website of the Department of Housing and Urban Development.
What does it cost?
As a borrower, you need to bear little upfront costs.
1. Loan origination fee- it will vary depending on the lender. You can pay it over the life of your mortgage by paying a slightly higher interest rate.
2. You will have to pay an Insurance premium to the FHA. The premium will be 1.5% of the principal amount you take.
3. If you resell or refinance, then you will have to pay a “3% exit fee” to the FHA. This will mean sharing profits from future home-price appreciation.
4. If you sell or refinance your house, then you will have to pay a percentage of the profit you make on the house.
If you sell your house within a year- 100% of the profit to be paid to the FHA
After a year- 90% of the profit to be paid to the FHA
The profit percentage to be paid reduces at 10% increment and stabilizes at 50 % after the 5th year. This is fixed percentage that you will have to pay.
What will I save?
What you will save will depend on the area you stay and what you are paying for your present loan.
Sacramento, California saw a huge home price drop up to 30%. Your loan may be reduced by 40% in this area. The interest rate on the FHA loan are fixed and reasonable for the life of the loan. You do not have to fear any big jump in the interest rate like a subprime adjustable-rate mortgage.
