Perfect Time for a Refinance - Now is the perfect time for a refinancing your adjustable rate mortgage. But the one thing that didn’t change with the takeover: the very strict lending requirements.

To add further to all of this according to the Wall Street Journal Blog, there are now more foreclosures on prime mortgages than on subprime ones. The latest figures, for July, put the number at 197,000, the highest for any month since they started keeping track in July 2007. Of those, 105,000 were prime mortgages, and 92,000 sub-prime. The June numbers also showed more prime foreclosures initiated. So the subprime meltdown has now spread into prime loans.

Cash refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A cash out refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe. This allows the homeowner to access the equity they have built up in their home and use it for making improvements, consolidating debts or for other purposes. If the property was purchased more than one year prior to the refinance, the homeowner can refinance the existing mortgage for up to 85 percent of the appraised value plus the allowable closing costs, which vary from state to state. The FHA Home Loan Company specializes in cash out refinancing with loan options that only need 5% equity in your property. Credit requirements remain flexible and bad credit borrowers still may qualify for FHA refinancing If they can provide income documentation and detailed letters that explain the circumstances that lead to the derogatory credit.

FHA Helps Troubled Homeowners - With the subprime meltdown and government take-over of Fannie Mae and Freddie Mac, those with blemished credit have few options for a mortgage refinance. FHA will refinance your home if you have at least 95% equity in it and at least 12 months of on time mortgage payments. If you’ve been late on your mortgage within the last 12 months, your best options are probably FHASecure, which expires on December 31, 2008, or the new HOPE for Homeowners Act that goes into effect on October 1, 2008. However, these two initiatives are only for people facing foreclosure due to a subprime adjustable rate mortgage (ARM) getting ready to adjust higher, one that’s recently adjusted or if they have an exotic hybrid ARM (negative amortization or interest only loan) that’s getting ready to reset into a fully amortizing ARM. Otherwise, your best bet to save your house from foreclosure is the loan modification.

Foreclosure Prevention FHA Loans

With FHA in the picture, I don’t think loan modifications will kill the mortgage refinance market. To start with, people with good credit who are just looking to get out from under a subprime or hybrid ARM will choose refinancing because they’ll still qualify and still maintain their good credit. As long as a lender continues to get the mortgage payments on time, they aren’t going to be open to loan modification, so someone will have to damage their credit first before doing a loan modification.

The two FHA foreclosure rescue plans provide a less costly alternative to refinancing than a loan modification. For a loan modification, you’ll typically have to retain a real estate lawyer that specializes in loan modifications, which is expensive. Plus, the amount of time it takes to negotiate a loan modification will do further damage to your credit. Most people aren’t willing to take that chance. Another reason why loan modifications won’t kill the mortgage refinancing market: scams. The Rain City Guide reported that a troubling trend of loan modifications charging predatory upfront loan modification fees is emerging. There are an increasing number of lenders that have no actual experience with loan modifications getting into loan modifications because they heard they can make good money.