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An Alt-A loan, also called an alternative documentation loan, is a loan that holds borrowers with good credit to different approval standards than traditional loans. Those applying for an Alt-A loan need not provide income verification or documentation of assets. Instead, the approval for an Alt-A loan is based primarily on an individual’s credit score. People who are great candidates for Alt-A loans include the recently divorced, entrepreneurs, the self-employed, and those who are paid on commission.

Alt-A loans are typically subject to manual underwriting, which may make the process take as long, if not longer, than securing a traditional loan. However, one of the benefits of manual underwriting is the increased flexibility provided to the borrower. Another point about Alt-A loans is that their interest rates are usually slightly higher than traditionally documented loan. This amount is usually less than one percentage point higher than a conventionally documented loan. That being said, many individuals applying for an Alt-A may not qualify for conventional loans because of their unique situations.

There are a number of subtle variations among different Alt-A loans, making it important for borrowers to get all the facts before making any commitments.

We’ve been talking about it for weeks, and it looks like the national mainstream media is finally catching up. This headline in a recent Philadelphia Inquirer story pretty much sums up what we’ve been harping on: “Going FHA Back in Vogue.”

Here’s the first sentence of this Harold Brubaker story on the Federal Housing Administration’s resurgence given the continuing subprime crisis:

As the mortgage industry goes through a wrenching retrenchment, government-backed loans for first-time homebuyers and borrowers with credit problems are coming back into favor.

Increasingly, new homeowners and shoppers and existing mortgage holders are turning to the government-backed loans of the FHA for help in securing a home or easing financial burdens. The FHA fell out of favor over the past decade as loose loan providers offered prospective homebuyers of all stripes financing without proof of income or financing restrictions. Now, the housing market and the country’s economic market as a whole is suffering the consequences of widespread failure and foreclosure stemming from the subprime market.

Suddenly, the FHA is back in the spotlight.

Homeowners holding subprime mortgages and those at risk of losing their homes to default or foreclosure are turning to the FHA for help in refinancing and, perhaps, saving their homes.

Federal lawmakers are working on legislation that would overhaul and modernize the agency, making it easier to provide relief to needy homeowners. The FHA expects to refinance about 120,000 loans this year, although administration officials have said repeatedly that they could refinance twice that amount if some of the guidelines and regulations eased. An overhaul may do just that.

Among the options being discussed in Congress is eliminating or reducing the required 3% down payment, raising the size of the loans FHA can insure to as much as $417,000 from $362,790, and being able to charge insurance premiums based on a borrower’s risk instead of a one-size-fits-all rate, according to the Wall Street Journal, which also recently wrote about the subprime crisis in a story titled, “How the FHA Could Help Borrowers.”

We’ve been telling you about all of this for weeks, because we want to help borrowers, too. If you need help refinancing your current mortgage or simply have questions about what’s best for you and your family, contact the lending and refinance experts at Mortgage Loan Place today.

With the recent turmoil resulting from sky rocketing adjustable rate mortgages (ARMs) many people are looking for a way to refinance from their current adjustable rate mortgage to a fixed rate mortgage. For a large number of individuals, refinancing may be the only way to not lose their homes. Although not for everyone, there is the possibility for the FHA to assist a large number of people through refinancing.

The ideal candidate for an FHA refinance is an individual who already has an FHA home loan. Homeowners may choose to do this to switch from an adjustable rate to a fixed rate mortgage, to cash in on the equity the house has accrued or to consolidate multiple debts. One refinance option that is only available to those who already have an FHA loan is a streamline refinance. There is not a cash-out option available with a streamline refinance, but there are other great benefits. Streamline refinancing allows for less documentation and underwriting, reducing refinancing costs. There are still costs involved, but borrowers can pay them up front or accept a slightly higher interest rate to cover costs. A streamline refinance must lower monthly interest payments and loan principal.

For those who do not already have an FHA insured mortgage (and those who do) there are regular refinancing possibilities. Borrowers can opt for a cash-out or non-cash-out refinance, among other choices. Because of FHA loan limits this is usually only an option for people with relatively low loan amounts. However, if pending legislation is passed FHA loan limits could be raised significantly, making FHA refinancing an option for millions of Americans.