Many Chicago-area homeowners have reported their homes aren’t worth as much as they need to repay. However, the problem stretches across the entire state of Illinois. Homeowners are finding themselves in declining neighborhoods and are underwater with their mortgage.
If you are a homeowner in a similar situation, the IHDA I-Refi program may offer you help.
What’s an “underwater mortgage?”
Typically, a mortgage is underwater when the value of the home is less than the original mortgage principal. Here is a very basic scenario to better explain (not including the loan amount lowering when one makes monthly mortgage payments):
- Borrower takes out a loan for a home valued at $250,000.
- Borrower’s makes a down payment of $8,750 (3.5% of purchase price).
- The loan amount is $241,250 ($250,000 home value - $8,750 down payment).
- The property value decreases 20% or $50,000.
- The property value now is $200,000 ($250,000 x 20%).
- The loan is UNDERWATER $41,250 ($241,250 loan amount - $200,000 decreased property value).
The loan amount, $241,250, is greater than the property value of only $200,000. In this scenario, if the borrower sold the home, they would have to pay to close the home sale of $200,000. Trying to sell is not a good way out as the borrower would have to bring $41,250 to the closing table. On the other hand, a lender is not going to refinance the loan as it’s underwater. So, traditional refinancing is not an option.
If you’re in this scenario, what’s the solution?
There’s a $50,000 mortgage assistance program to help bail you out!
I-Refi with IHDA offers qualifying Illinois homeowners who owe more on their mortgages than their homes are worth up to $50,000 to reduce the amount they still owe on mortgages.
How do you qualify?
- Borrower on a loan that’s underwater.
- Owe at least 10% more than the value of your home.
- Own a 1 or 2-unit home.
- Current on making mortgage payments for at least the past 12 months.
- Live in the home with the underwater mortgage.
- Income-eligible homeowners (IHDA approved lender will assist).
- Credit qualify through a IHDA approved lender (NewCastle Home Loans).
- Post-assistance loan-to-value will be 90-97%.
- Not been convicted of felony larceny, theft, fraud or forgery, money laundering or tax evasion over the last 10 years.
- If you qualify, you must attend homeowner counseling sessions.
Do you want to erase negative equity?
I-Refi offers a forgivable loan that caps at $50,000. The average monthly borrower savings is around $360. The money the program pays for allows part of the mortgage to be forgiven, and you have a new 30-year fixed-rate mortgage subject to market rates.
What happens if a borrow has a second lien on title, can they be paid off with I-Refi assistance?
- FHA – second line must be “seasoned” with no draws in 12 months.
- Conventional Loans – second lien must have been purchase money only.
What are the steps to getting the $50K to get above water?
1. Choose the best mortgage.
- Find the best mortgage rates with our real-time mortgage calculator.
- Compare your loan options and see how much it will cost.
2. Get approved.
- Apply online with our 15 minutes home loan application and get approved instantly.
3. Close with confidence.
- Review your disclosures, services, and click-to-sign all online.
Chicago homeowners who are struggling with an underwater loan might have a way out. The I-Refi by IHDA is a great opportunity to help you with this unfortunate situation of owing more on your home than its current market value.
The program offers up to $50,000 (forgivable) to buy down your mortgage and refinance you into an affordable loan. This is a great opportunity to hit the reset button and erase that negative equity.
Get the process started today and call us at 855-610-1112.