Many of you have taken advantage of the low mortgage rates over the past 18 months and have refinanced into a lower-rate or shorter-term mortgage. However, there are some people who were left out of this opportunity and now Fannie Mae and Freddie Mac have come up with new programs to help.
RefiNow™ and Refi Possible® are new mortgage programs with the flexibility to make it easier and less expensive to qualify homeowners to reduce their monthly housing costs and take advantage of today’s low-interest rates. With eligibility expanded to borrowers with up to a 65% debt to income ratio, these programs represent an opportunity for people to refinance that may have not previously been qualified.
WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) today issued additional details about its new RefiNow™ option, which is available for qualifying homeowners with a Fannie Mae-owned mortgage beginning June 5, 2021. Initially announced April 28 by the Federal Housing Finance Agency, RefiNow makes it easier for eligible homeowners earning at or below 80% area median income (AMI) to refinance at a lower interest rate and reduce their monthly mortgage payment.
“Lower-income borrowers typically refinance at a slower pace than higher-income borrowers, potentially missing an opportunity to save on housing costs. Fannie Mae’s new RefiNow option will help more homeowners refinance by removing some of those barriers, improving affordability, and promoting sustainable homeownership,” said Malloy Evans, Senior Vice President and Single-Family Chief Credit Risk Officer, Fannie Mae.
RefiNow helps homeowners by:
- Requiring a reduction in the homeowner’s interest rate by a minimum of 50 basis points and a savings of at least $50 in the homeowner’s monthly mortgage payment.
- Providing a $500 credit from Fannie Mae to the lender at the time the loan is purchased if an appraisal was obtained for the transaction. The lender must pass the credit to the homeowner.
- Waiving the 50 basis point up-front adverse market refinance fee that Fannie Mae otherwise charges to lenders on balances at or below $300,000.
To qualify for RefiNow, homeowners must have:
- A Fannie Mae-backed mortgage secured by a 1-unit, principal residence;
- A current income at or below 80% of the AMI (not the income as of origination of the original loan);
- Not missed a mortgage payment in the past six months, and no more than one missed mortgage payment in the past 12 months; and
- A mortgage with a loan-to-value ratio up to 97%, a debt-to-income ratio of 65% or less, and a minimum 620 FICO score.
Statements from Fannie Mae Board Chairwoman Sheila C. Bair and Fannie Mae CEO Hugh R. Frater on FHFA’s announcement of the new Enterprise refinance option are available here.
About Fannie Mae
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of people in America. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk.