I hadn’t thought about refinancing after 5 years. Wonder how that will work out. Hopefully rates will be in the double-digits by then.
I have NO sympathy for those who overpaid for a house and can no longer make their payments. They **should be foreclosed on** and the fact that so many are whining about the equity sharing tells me they are the most ungrateful bunch of leeches ever.
From Bankrate:
Again, there is a catch. If you take refuge in this program, you’ll have to share your home-price appreciation with the FHA. If you sell the house (or refinance the loan) less than a year after refinancing into the FHA loan, the FHA gets all of the house price appreciation. The FHA’s cut decreases over the next five years — but never goes below 50 percent.
What does this mean to the borrower? Take the example above. You refinanced when the house was appraised at $100,000. A little over two years later, you sell the house for $120,000. You split that $20,000 difference with the FHA. In this case, because it’s between two and three years later, the FHA gets 80 percent. The FHA would get $16,000 and you would get $4,000.
The equity-sharing arrangement goes like this: If you refinance or sell less than a year after getting the FHA loan, the government gets 100 percent of the home price appreciation. If it’s more than a year but less than two years, the FHA gets 90 percent. The FHA’s cut then decreases by 10 percent until the five-year mark. Anytime after that, the FHA gets half of the appreciation, no matter how long you have the loan or own the house.
This arrangement will encourage homeowners to keep their FHA-insured mortgages for at least five years, but to refinance before home prices zoom upward again.
