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Once you have the approval you will want to put it with your short refinance package and submit to your lender for approval.
In this package you will have to fill out an application, a personal financial statement that will list all you income and expenses, 2 months recent bank statements, 2 years tax returns, current paystubs and a hardship letter. This is not time that you want to just pick any mortgage Hot Stamping Glue broker from the yellow pages or to let the family friend that is a mortgage broker use you as a guinea pig.
Now to start the process you will need to contact you lender and let them know you are considering doing a short refinance and to send you the short refinance package.Today there are many home owners that have paid their mortgage on time, but have found themselves in an adjustable rate mortgage, that has adjusted or is scheduled to adjust in the near future. You want to make these letters simple and to the point, no need to write a 50 page essay. If they say NO, then you will want to ask what other options are available to you, such as a loan modification, and IF they say yes, then great, you now need to find a short refinance expert to get the ball rolling.
From here you will want to proceed with you new FHA Loan, which will require a separate FHA appraisal, hopefully the appraisal will have the same or similar value to the BPO, if there is a significant difference, then your mortgage broker will have to go back to the lender and renegotiate.
Once the mutually beneficial agreement has been reached, then the lender will issue a release of lien. The hardship letter is simply an explanation of why you can no longer afford your mortgage payments and why you need to refinance. Short Refinances are a complicated transaction and require a lot of attention and a great deal of knowledge of the loss mitigation procedures.
The next step is to get pre qualified with an FHA Lender, the reason FHA Lenders are preferred is because they will give you the highest LTV possible which will make your offer to your current lender more attractive.
Once the package is received, then your lender will order a BPO (Brokers Price Opinion), this is similar to an appraisal, but is an inspection normally performed by a real estate broker in the area to give the lender an idea of the current market value. This document will show what the lender will accept as a net payoff. Well so they ve been told, but one insider secret option that is available to home owners in this situation is a short refinance. The ideal situation is to get you refinanced without having to bring any money to the closing table, but in some cased the lenders will not bend, and to make the deal work you will have to bring some cash to close.
If the above scenario describes your situation, then your first step towards a short refinance is to contact your lenders Loss Mitigation department to see if they would be willing to participate in a short refinance.
You will want to find a Mortgage Expert that has experience with loss mitigation and who specializes in Short Refinances. Once the BPO is reviewed, the lender will give you an offer for the new payoff amount. Now they have good credit, good mortgage history, but the problem is they cannot refinance as they owe more than their home is worth.