Connecticut FHA Mortgages May Help Homeowners With Large Mortgages
If you have all but given up on getting that elusive 6.5% interest rate because you are over the loan limits in your county there may be hope for you yet. Due to millions of homeowners that need help because their adjustable rate mortgages are going up legislation has finally been passed to try and help every segment of the market.
From the homeowner that has a mortgage over the FHA limits to the homeowner that has fallen behind on their mortgage because of a rising payment. The proposal is currently pending in the U.S. Senate Banking Committee which would raise FHA home-loan limits in high-priced markets that are common in many areas in Connecticut. The main reason for the roadblock to this bill has already passed in the House, which would allow homeowners to qualify for a FHA mortgage up to $417,000, in areas where the median home price exceeds the conforming limit.
There is also another bill passed by the House and is also pending in the Senate Banking Committee. This bill would allow the FHA to insure larger loans with more-flexible terms, including no-money-down products. Currently, FHA loans require a minimum 3 percent down payment.
One of the most frequent complaints from borrowers and lenders that we hear in higher-priced areas in Connecticut is that the FHA programs, including the new FHASecure initiative, are useless in areas where home prices and mortgage balances are significantly higher. For those of us who are in the business it is obvious that many of the losses caused by subprime mortgage interest rate resets are concentrated in these high priced markets. There is a huge impact to a borrower’s finances when their interest rate increases by a 2 – 3%. The increase in the interest rate is much more significant when the loan amount is higher as opposed to a smaller loan size.
If you are one of the homeowners on the edge and are waiting for some relief, now would be a good time to get your income documentation, property information and financial paperwork together in preparation to jump on the opportunity to get into a FHA insured loan program. Keep in mind that the rates are often in the 6% range and offer you some leverage in case you get behind on payments.