Getting Your Government Mortgage Bailout

by David Hall on December 14, 2010

Government Mortgage Loan Options

Are you getting your slice of the government bailout?

Here are three great government mortgage programs that you should know about:

HUD 203(k) Mortgage Loans – Fixer-Upper Loans

The United States Department of Housing and Urban Development considers the Section 203k programs the front line for stimulating the economically necessary activities of home building and home buying. It specializes in single family properties and in rebuilding communities most affected by the economic and mortgage crisis.

If a home is at least a year old, a HUD Section 203k government loan can help provide mortgages for new home buyers and refinancing homeowners to rehabilitate or modernize their homes.

In order to qualify for these special government-backed loans the home’s rehabilitation cost must be at least $5,000, and the home’s value must not be greater than the Federal Housing Administration’s mortgage limit for the surrounding area.

Although single family homes are the main focus of the statute, condos are eligible if they were in previously approved Federal Housing Administration projects.

Basically, any home that meets FHA guidelines and is improved or modernized is probably eligible for a 203k Rehab Loan.

FHA Streamline Mortgages

Federal Housing Administration streamline loans are meant to lower monthly mortgage payments and interest rates for eligible homeowners. Candidates must originally have bought the property under a Federal Housing Administration loan to be eligible. Other eligibility requirements include:

The homeowner must be current on their current mortgage and all mortgage payments from the previous year must have been made on time,
The homeowner must own the property for at least six months,
The refinance can not be a cash-out refinance. Meaning the borrower can not receive cash at closing from the procedes of the mortgage financing,
The new refinance mortgage must lower the borrower’s principle and interest payment,
The mortgage lender refinancing your home must be an FHA approved lender.

The basic idea behind this very popular FHA government-back refinancing program is to get good borrowers out of risky adjustable rate mortgages and into more stable FHA fixed rate mortgages. The trick is always the current mortgage financing and the home’s current appraised value. To work, the homeowners needs some reasonable level of equity in the home.

VA Home Loans

The United States Department of Veteran Affairs has set up the VA loan specifically for men and women of military service and members of the National Guard to be able to afford homeownership and retain their homes if already homeowners.

Veteran Affairs home loans also include many special considerations to account for circumstances unique to military service.

Repayment plans, which allow home owners to make up for missed mortgage payment installments over time;
Special forbearance, which initiates a stay on foreclosure proceedings for a specified period of time;
Loan modification, which gives a fresh start to the mortgage if the buyer falls behind on payments;
Short sales, which allows the buyer to sell the home for less than it was originally purchased with the permission of the mortgage lender

The overall goal of VA loans is to give service members the opportunity for affordable homeownership and to help them keep their homes during times grateful service to our country.