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Short Pay Refinance: This is a process whereby a lender reduces the principal balance of a homeowner's mortgage in order to permit the homeowner to refinance with a new FHA lender. The process is similar to a short sale but, instead of the property being sold it is refinanced with a new FHA loan.
Many homeowners are caught in an unexpected situation. Their mortgage payments have increased, their income has been reduced and their homes have lost value. You may be experiencing a similar situation. Although the "Short Sale" has become a well-known solution for borrowers to avoid foreclosure by selling their home for less than what is owed, the "Short Payoff Refinance" Short-Pay Refinance is becoming a popular tool for borrowers to retain their home, lower their principal balance and most importantly, lower their monthly payment with a fixed-rate FHA insured loan.
This new program was developed out of TARP, the Troubled Assets Relief Program (TARP). This program was developed by the United States government to purchase assets and equity from financial institutions in order to strengthen the financial sector. It is the largest component of the government's measures in 2008 to address the subprime mortgage crisis.
For those borrowers who still have decent credit, income and no mortgage lates, but due to a decline in the value of their home (owing more than it's worth), a Short-Pay Refinance is the perfect solution!
