- New FHFA refinance product for low-income borrowers
- Lenders must ensure minimum savings of $50/month to borrowers plus lowered interest rate of at least 50 basis points
FHFA Releases New RefiNow Option
Thousands and thousands of wealthier borrowers benefitted from refinances last year…now it’s time for low-income borrowers to do the same.
The Federal Housing Finance Agency (FHFA) just announced RefiNow, a new refinance program specifically targeting low-income borrowers with single-family mortgages backed by Fannie Mae and Freddie Mac.
Eligibility Requirements for Borrowers
To qualify for RefiNow,borrowers must
- Have a mortgage with Fannie Mae/Freddie Mac
- Have an income at or below 80% of area’s median income
- Must be current on mortgage payments for at least 6 months and with no more than 1 missed payment over the last 12 months
- Must not have mortgage with LTV ratio greater than 97% and a DTI no higher than 65%
- Must have a FICO score of 620 or more
Lenders must ensure that borrowers save at least $50/month in mortgage payments and, at the same time, drop their interest rate by at least 50 points. This means that the already historically low interest rates of 3.5% would be reduced to 3.0% with this new option.
The FHFA also requires that lenders provide a maximum $500 credit of an appraisal (if the borrower isn’t eligible for an appraisal waiver.) The GSEs will reimburse the lender once the loan is sold.
Lenders must waive its market refinance fees for borrowers having loan balances at or below $300,000. This waiver all by itself could save average consumers nearly $1,400.
Impact of RefiNow
RefiNow is expected to be available to eligible borrowers at the beginning of this summer.
Remember, this new FHFA refinance option is designed to help borrowers who have not already refinanced their mortgages between $1,200 – $3,000/year on their mortgage payment, according to FHFA Director Mark Calabria.
Thanks to HousingWire.
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