Arizona, are you upside down? Explore refinance mortgage loans.

Arizona has experienced a rapid decline in home value.  Many homeowners have desperately sought relief through traditional refinance loans.  However, a good percentage of Arizona homeowners are upside down.  Does this sound like your situation?  Your Arizona refinance may not be as difficult as you think.

Many people have turned to short sells and loan modification programs.  A short sell can help you get out without having to foreclose.  The problem is that lenders view a short sell the same as foreclosure.  This means that you can’t finance another home for three years.  Be advised that guide lines do change but until then 3 years is the rule.

Loan Modification is not always the answer

While a loan modification may relieve some pressure it’s not a permanent solution.  Under the Home Affordable Act, banks will modify your mortgage.  The Home Affordable guideline requires that you prove a financial hardship to qualify.  Let us assume you can prove some sort of hardship.  If you still have an income your Bank is authorized to explore modification.

Many people falsely believe that a loan modification will eliminate principle.  This is not the case!  First, your Bank will offer you a floor interest rate.  This will be the first attempt to lower your housing ratio to 31%.  If that doesn’t work, your Bank will re-amortize your mortgage.  At this point most people will qualify.  The result is you keep your home and you’re still upside down.

There are a small percentage of people who get principle reduction.  Depending on your situation a loan modification may be an option.  However, you should be aware of other refinance programs before you proceed.  The following are three different Arizona refinance mortgage programs that may help you.

FHA Streamline

The Arizona FHA loan can help you refinance if you are upside down.  With FHA streamline you can refinance your first mortgage up to 97.5%.  However, you can keep an existing second mortgage up to 125% home value.  Depending on your situation this Arizona refinance could help you.  Another option is for veterans.

Arizona VA Loan

The Arizona VA loan allows veterans to refinance up to 100% of home value.  This mortgage won’t help veterans who are upside down.  It’s still worth mentioning though because it allows 100% of home value.  In the past VA refinance loans were limited to 95%.  Finally, there is the DU refinance plus for Fannie Mae owned mortgage loans.

DU Refinance Plus

The DU Refinance Plus allows you to refinance up to 125%.  The catch 22 here is that your mortgage must be owned by Fannie Mae.  This Phoenix refinance mortgage is a 30 year fixed mortgage.  It also requires less documentation.

In conclusion, before you sell or modify look into the three options outlined in this article.  Remember, if you short sell you can’t finance another home for 3 years.  If you modify your loan you’re still upside down.  In the end, you could save yourself a lot of undue grief by exploring all your options.

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