There is a new mortgage refinance program being launched shortly by the U.S. government. Eligible borrowers will be able to refinance their current mortgages at a lower interest rate and lower their monthly house payments beginning in the summer of 2021.
This new program has the potential to save some homeowners around $100 to $250 a month on mortgage payments says the Federal Housing Finance Agency, the overseer of mortgage-backing giants Freddie Mac and Fannie Mae.
Last year the number of refinancing applications skyrocketed due to historically low mortgage interest rates. There were several homeowners across the country looking to take advantage of cutting their monthly mortgage payments, many as a means of helping to decrease the impact of economic hardships from the pandemic. But there were more than 2 million low-income families that did not take advantage of the lower mortgage interest rates.
This new refinancing program is designed to help eligible homeowners who have not already refinanced in the last year to save between $1,200 and $3,000 a year on their mortgage loan. To be eligible for this new program applicants must already have a mortgage that is backed by the federal entities of Fannie Mae or Freddie Mac for the home that they call their primary residence. Applicants must also have proof of income that is at or below 80% of the median income in the area which they live. Another qualification is that borrowers must have no missed mortgage payments in the previous six months and not more than one missed payment in the previous 12 months.
Other qualifications include having a loan to value ratio of less than 97% and a debt to income ratio of less than 65% with a FICO credit score of 620 or higher.
There are some qualifications or rules that apply to lenders as well in this new refinance program. Lenders will be required to reduce the applicant’s payment by at least $50 dollars per month and offer a 50 basis point, or half a percentage point, reduction in the interest rate from the current held mortgage of the applicant. Lenders will have a choice to participate in this program, but in order to participate they will need to also wave the current adverse market refinance fee for applicants seeking this type of refinance whose loan balance is $300,000 or less. If the borrower is not eligible for an appraisal waiver on their home, the lender must provide a credit of up to $500.
Are you hoping to refinance your home this year? There are several different refinance options available to homeowners and mortgage rates are still much lower than they have been in pre-pandemic years.
For more information on your mortgage refinance options in Mission Viejo or California please contact me at any time.
More Tips for Refinance Options:
- Can You Refinance a Mortgage on a COVID Forbearance Plan?
- Can Cash-Out Refinances Help Reduce Debt?
- The Basics of No-Closing-Cost Refinances
- Can I Use a Refinance to Buy a Second Home?
- Can I Refinance if I’m Self Employed?
- When Does it Make Sense to Refinance?
- 7 Simple Steps to an Easy Refinance
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