FHFA Releases Mortgage Refinance Programs for Low & Medium-Income Families
The Federal Housing Finance Agency (FHFA) announced an update on the expansion of Fannie Mae and Freddie Mac’s refinance programs for low- and moderate-income borrowers. The new programs, called RefiNow and Refi Possible help these households take advantage of historically low mortgage rates. Expanding the loan eligibility options is now possible for more homeowners. These programs now include homeowners making at or below 100% of the area median income (AMI) – up from 80% AMI.
“Last year saw a spike in refinances, but more than 2 million low-income families did not take advantage of the record low mortgage rates by refinancing,” said Director Mark Calabria. “This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200.00 and $3,000.00 a year on their mortgage payment.”
RefiNowTM is an affordable refinancing option by Fannie Mae available to all qualified borrowers who start their mortgage application on or after June 5, 2021. This program can only be used to refinance a one-unit primary residence. RefiNowTM helps homeowners by requiring a reduction in their interest rate by a minimum of 50 basis points and a savings of at least $50 in their monthly mortgage payment.
Refi PossibleSM also helps homeowners by requiring a reduction in their interest rate by a minimum of 50 basis points and a savings of at least $50 in their monthly mortgage payment. Qualifying borrowers are guaranteed an interest rate reduction of 0.50% or more. Eligible borrowers with a Freddie Mac-owned single-family mortgage will benefit from a reduced interest rate and lower monthly mortgage payment, helping save an estimated $100.00 to $250.00 a month. Borrowers may also receive a credit of up to $500.00 toward an appraisal on their property if it’s required.
After a thorough review of data collected from the use of the loan flexibility, Fannie and Freddie decided to also incorporate desktop appraisals into their selling guides for new purchase loans starting in early 2022.
“Expanding eligibility for low- and moderate-income families to refinance their mortgage and lower their monthly payments, together with leveraging desktop appraisals to reduce inefficiencies in the mortgage process, are meaningful steps towards overcoming barriers to affordable and sustainable homeownership,” said FHFA acting director Sandra Thompson.
At an MBA Annual conference in San Diego she also stated: “By taking advantage of lower interest rates, borrowers can reduce the share of their income they have to use for housing costs”. “Certainly, placing a borrower in a loan they are not able to repay is irresponsible,” she said. “When I say broad access to credit, as a lifelong regulator, I mean broad access to sustainable credit.”