Fannie Mae’s New Refinance Program
It is no secret that the real estate market has been red hot. Much of this is because mortgage rates dropped to historic lows. This presented an incredible opportunity for home buyers who could lock in low rates, keeping monthly payments low and saving thousands over the life of their home loan. This was also an incredible opportunity for current homeowners who could refinance their mortgage and also save money compared to their current home loan. Unfortunately, lending standards have been very strict for mortgage refinances. Extreme restrictions from lenders has left millions of homeowners from being able to refinance their mortgages at today’s low rates. Fortunately, the tides are turning. A new program from Fannie Mae is giving low-income homeowners a chance to refinance their home loans. If you have tried to refinance your mortgage, but did not meet their requirements, your opportunity might have just arrived.
Background on the Fannie Mae Refinance Program
Low mortgage rates have been great for many homeowners, but many have not been able to benefit from them. Homeowners with low incomes, low credit scores, and high debt ratios have been excluded from refinancing their existing mortgages. That is changing. On April 28, 2021 the Federal Housing Finance Agency announced that they are directing Fannie Mae to provide refinancing opportunities to low-income Americans. This new program will help millions of Americans who have Enterprise-backed single-family mortgages with Fannie Mae.
Benefits of the Fannie Mae Refinance Program
The new refinance program is intended to help borrowers reduce the interest rates on their current mortgages and reduce their monthly payments. In fact, this program is mandating that anyone who qualifies must have their interest rates reduced by at least 50 basis points and their monthly payments reduced by at least $50. Additionally, this program will provide you up to a $500 credit for an appraisal if one is required by your lender. Millions of Americans will be able to save considerable money by taking advantage of this program. However, there are still qualifications that must be met in order to take advantage of this new refinancing option.
Requirements of the Fannie Mae Refinance Program
This new mortgage refinance program is an excellent opportunity for homeowners who have not been able to refinance their mortgage over the past year. There are some requirements in order to take advantage of this program.
Borrowers must have an Enterprise-backed mortgage on a one-unit single-family property that must be occupied by the owner. If you are not sure as to whether or not your existing mortgage meets this requirement, you can use an online tool from Fannie Mae that will give you your loan’s details.
Borrowers must have an income that is 80% of the area’s median income or lower. Fannie Mae has provided an online tool that will let you easily find out what is your area’s median-income.
Borrowers cannot have missed a mortgage payment within the past six-months. They cannot have not missed a mortgage payment within the past year.
Borrowers cannot have a loan-to-value ratio greater than 97%.
Borrowers must have a debt-to-income ratio greater than 65%.
Borrowers must have a FICO score of at least 620.
Do Mortgages with Freddie Mac Qualify?
This current program is only targeted to homeowners who have their existing mortgage backed by Freddie Mae. However, this program will be extended to homeowners who have their home loans backed by Freddie Mac in the near future. We expect this program to be rolled out by Freddie Mac in August. However, contacting your mortgage broker now can help you get everything you need in order to make sure you are ready when it becomes available.
Take Advantage of Fannie Mae’s Refinance Program Now
If you meet the requirements of this new refinancing program the best thing you can do is take advantage of it right away. All you need to do to secure a lower interest rate on your mortgage and reduce your monthly payments is to contact your current mortgage broker. All of the mortgage professionals at Peoples Choice Mortgage are familiar with this program and will be able to help you right away with any questions you have. If you are not a current client of Peoples Choice Mortgage, you can still contact us! Our experienced mortgage professionals are always looking to add new clients to our Peoples Choice Mortgage family. We will help you with every step of the process and give you the guidance you need to make refinancing as easy as possible.
Final Thoughts
The historically low mortgage rates of the past year have been a gift to home buyers and home owners. Unfortunately, millions of homeowners and home buyers have been unable to benefit. The refinancing program announced by Fannie Mae is a big step toward ensuring that homeowners of all incomes and credit scores can take advantage of today’s low rates. If you want to know if you can qualify for this program, contact us today. There is no reason to wait when acting now can save you money tomorrow.
