Obama Mortgage Refinance: Can I Use the New Government First Time Buyer Loan Scheme If I Have a Poor Credit Rating?
Buying a home after a disaster seems like an overwhelming task, but the government provides some help through a FHA program, 203(h). By providing mortgage insurance to disaster victims, borrowers can finance the purchase of a home or rebuilding costs.
Will the scheme help you buy a home if you have poor credit rating? If you are struggling to get Obama mortgage refinance because you have a poor credit rating, then the new scheme may help you. It is currently unclear what credit checks you will have to pass to qualify for the Firstbuy loan scheme. However if you qualify, you will then only require a mortgage for 75% of the value of the property you want to buy. If your credit rating is poor, you are far more likely to secure a 75 percent loan to value mortgage than one where you have a much smaller deposit. Having said that, it is important to be aware that any mortgage you are offered will normally be based on a significantly increased rate of interest. This is because your poor credit history suggests to the lender that you are a high credit risk. Not all mortgage lenders will lend to people who are high risk and you should speak to a specialist mortgage broker who can advise you about which lenders may be willing to lend to you.
Being a part of one government plan or another will not dramatically alter the ways that they do business, and only the press coverage of these programs will help inform homeowners of their existence. For instance, most mortgage companies have a foreclosure or loss mitigation department already; the problem is that homeowners are simply not aware of their existence and do not utilize the resources the bank offers. Many end up selling, refinancing, or giving up on their homes, rather than attempting to qualify for a solution through the loss mitigation department at the bank.
Thus, the government programs are not adding anything really new or devising creative solutions to any part of the foreclosure crisis, which makes the plans more a public relations stunt than anything. Homeowners who are unable to work with their banks now or do not qualify for a workout program will not find any additional help from the government programs than they could have found in their absence.
The Process- By using the FHA 203(h) program, you only add a little extra paperwork to ease your mortgage application toward acceptance. When you are applying for a loan, you will want to ask for the application for the mortgage insurance program. HUD approved lenders will submit the application through the proper channels. At this point the mortgage company will handle the rest of the process, you will just need to complete the final loan paperwork.
Learn more about Obama Mortgage Relief Plan Qualifications.
