Here’s What You Need to Know About Fannie Mae’s Refinance Program
Fannie Mae’s new refinance program “RefiNow” is scheduled to launch June 5, available for qualifying homeowners with a Fannie Mae-owned mortgage. Low-income households could potentially save hundreds of dollars a month on their mortgage, reports CNBC.
According to a statement released by Fannie Mae, here are the eligibility requirements:
- Eligible homeowners must earn at or below 80% of the area median income
- The homeowner hasn’t missed a mortgage payment in the last six months and no more than once in the past year
- A mortgage with a loan-to-value ratio up to 97%
- A debt-to-income ratio of 65% or less
- A minimum FICO credit score of 620
- The mortgage must be owned by Fannie Mae
Homeowners meeting these requirements can refinance at a lower interest rate to reduce their monthly mortgage payments. CNBC reported that this program could help an estimated 2 million homeowners.
“Lower-income borrowers typically refinance at a slower pace than higher-income borrowers, potentially missing an opportunity to save on housing costs,” said Malloy Evans, Senior Vice President and Single-Family Chief Credit Risk Officer at Fannie Mae in a company statement.
CNBC noted that according to Freddie Mac, mortgage rates hit historic lows in 2020, and refinancing activity amounted to $2.6 trillion for that year. This was the highest total since 2003, with a recorded $3.9 trillion. CNBC also pointed out that according to Fannie Mae’s Economic and Strategic Research Group, the 30-year mortgage rate is expected to average 3% through 2021.
Lenders will have to reduce the homeowner’s monthly mortgage payment by at least $50 and reduce the borrower’s interest rate by a minimum of 50 basis points, or half a percentage point, reports CNBC. The current adverse market refinance fee for borrowers whose loan balance is no more than $300,000 would also need to be waived by lenders. The lender would also need to provide a credit of up to $500 if the borrower doesn’t qualify for an appraisal waiver.
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