Here’s What You Need to Know About Fannie Mae’s Refinance Program

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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.

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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.

See: Should You Refinance Now With the Low Mortgage Rates?
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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.

Interested homeowners can contact any mortgage lender to ask about the RefiNow program; however, lenders aren’t required to participate, explains CNBC.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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