If you are a homeowner with a FHA loan and you decide to purchase another home, the option of an FHA Repurchase is available to you. This can be done as a direct loan or through a refinancing scheme called a “re-amortizing”. What is an FHA Repurchase?
An FHA Repurchase is an option for borrowers who no longer qualify for an FHA mortgage but who would prefer to pay less in monthly mortgage payments. When an FHA mortgage is repaid, the agency refunds the difference, called an FHA Premium, to the lender. FHA Premiums is not taxable income and you never have to pay these funds. The lender, however, may impose reasonable restrictions on the use of an FHA mortgage for purposes other than replacing an existing FHA mortgage.
An FHA Repurchase is a good choice for borrowers with bad credit, poor credit, or a bankruptcy that caused a decline in the borrowers’ credit score. Although some lenders require collateral for a FHA Loan, most accept non-home affordable loans because they are less risky. In addition, if the borrower has a bad credit, the monthly mortgage payment may be higher at first, but this will quickly change due to the lower interest rate. Furthermore, short-term financing is available and shorter term mortgages are adjustable rate (ARM) mortgages that have fixed interest rates for the life of the loan.
The primary advantage of an FHA Repurchase is that it provides cash to help make short term, high cost repairs or renovations of your home. This can often mean the difference between a functional house and a house that will need constant repair and maintenance, which could cause you to lose your home. The FHA also makes it easier for first time home buyers by providing reasonable interest rates on a short term basis. With a short term loan, a buyer can finance the cost of renovation or repair of a home. The lender will take over collecting monthly payments until the desired end date of the loan, and the homeowner does not need to worry about accruing more debt during the duration of the loan.
Another advantage of these loans is that they do not require a credit check to obtain. Many people fear that applying for a traditional bank loan will result in them getting a high interest rate, but an FHA Repurchase is not designed to provide a larger initial cash flow than credit cards and payday loans. Because of their lower interest rates and due dates, these types of loans are extremely popular for borrowers with low credit scores and high debt balances. Most lenders require a decent credit check apply for an FHA Loan, however.
An FHA Repurchase can be a good option for borrowers who are currently struggling with high monthly mortgage bills or facing the possibility of foreclosure. Although it is not advisable for consumers with bad credit, many of these loans do not even require a credit check. Because the repayment terms are quite flexible, an FHA Repurchase makes good sense for borrowers in dire situations who are desperate for cash advance options. To find out if an FHA Loan would be right for you, an FHA consultant can help you determine if a loan is right for your situation. In South Carolina, payday advance lenders are prohibited from asking about financial history.