Refi now and refi possible

The Fannie Mae RefiNow program aims to assist over 2 million homeowners by reducing their monthly mortgage payments. By removing common barriers to refinancing, such as high fees and restrictive eligibility criteria, this initiative is designed to make refinancing more accessible for low-income borrowers.

Key Features of Fannie Mae RefiNow:

• Income Eligibility: Borrowers must earn no more than 80% of the median income for their area.
• Payment Reductions: Lenders must lower monthly payments by at least $50 and reduce the interest rate by at least 0.50%.
• Loan Requirements: The loan must be conventional and owned or securitized by Fannie Mae, with a 30-year fixed term, an LTV of up to 97%, and a maximum DTI of 65%. Borrowers need a minimum FICO score of 620.
• Fee Waivers: The usual $500 adverse market fee for refinanced loans under $300,000 will be waived.
• Eligible Loans: Only conventional mortgages owned or securitized by Fannie Mae are eligible, and the loan must be at least 12 months but no more than 120 months old.

Eligibility for the Fannie Mae RefiNow Program:

• Credit Score: At least 620.
• Payment History: No missed payments in the last 6 months, and no more than one missed payment in the last 12 months.
• DTI Ratio: Must be 65% or lower.
• Occupancy: The loan must be for a one-unit primary residence.
• Property Type: All eligible property types are allowed, with certain project reviews waived.

Freddie Mac’s RefiPossible program will launch on August 30, 2021, and is designed to offer similar benefits as Fannie Mae’s initiative. It is expected to help over 1 million homeowners by providing opportunities for reduced mortgage payments.

• Income Eligibility: The same as Fannie Mae’s program, with a cap of 80% of the median area income.
• Payment Reductions: Monthly payments must decrease by at least $50, and interest rates must be reduced by at least 0.50%.
• Loan Requirements: The loan must be a conventional mortgage owned or securitized by Freddie Mac, with a 30-year fixed term, an LTV of up to 97% for standard homes and 95% for manufactured homes, and a maximum DTI of 65%.
• Fee Waivers: The adverse market fee for loans under $300,000 will be waived.

• Credit Score: At least 620.
• Payment History: Similar to Fannie Mae’s program, with specific requirements on delinquencies.
• DTI Ratio: Must be 65% or lower.
• Occupancy: The loan must be for a one-unit primary residence.
• Property Type: Includes townhomes, condos, and single-family homes.

For both programs, homeowners can check if their mortgage is backed by Fannie Mae or Freddie Mac using their respective lookup tools. Applications for Fannie Mae’s RefiNow program can be submitted starting June 5, 2021. While participation in these programs is not mandatory for lenders, many major lenders are expected to offer these refinancing options.
For more information or to apply, homeowners can visit our website to connect with eligible lenders and explore their refinancing options.

Refinancing can offer significant benefits, but it also comes with potential drawbacks. Low-income borrowers considering refinancing should be aware of scenarios where refinancing might not be advisable. We can provide you with a mortgage quote, helping you determine if refinancing is the right choice for you.
Break-Even Period
The break-even period is the time it takes for the savings from reduced monthly payments to cover the costs of closing the new loan. If closing costs are high, it may take longer to recoup these costs through lower payments, making the refinance less beneficial in the short term. To calculate your break-even period, divide the closing costs by the amount of monthly savings. This will show you how many months it will take to break even.
There’s no universal ideal break-even period; it depends on your individual situation. Consider how long you plan to stay in your home or whether you might refinance again soon. Homeowners should weigh their break-even period to determine if refinancing is financially sensible.
Under new refinancing schemes, closing costs are capped at $5,000, making it easier to estimate and manage the break-even period.
Unaffordable Closing Costs
High closing costs and interest rates are common reasons low-income homeowners shy away from refinancing. Even if refinancing lowers monthly payments, the high upfront costs may be prohibitive. New schemes aim to mitigate this issue by requiring lenders to waive some fees and provide funds for appraisals. However, closing costs can still pose a challenge.
One solution is to find a loan that allows rolling closing costs into the loan balance. A mortgage broker can assist in locating lenders that offer this option.
Higher Long-Term Costs
While refinancing might lower your monthly payment, it doesn’t always mean you’ll pay less over the life of the loan. Extending the loan term could lead to higher overall costs, especially if you’ve been paying down the loan for several years. It’s crucial to consider whether refinancing will truly save you money in the long run.
Loans under the ‘RefiNow’ and ‘Refi Possible’ schemes are designed to benefit low-income borrowers, minimizing the risk of higher long-term costs by ensuring significant benefits for homeowners.
Adjustable vs. Fixed-Rate Loans
Refinancing from one fixed-rate mortgage to another with a similar interest rate may not significantly reduce lifetime costs, though it might lower your payment. Some homeowners opt for adjustable-rate mortgages, but these come with risks. Consulting with MortgageQuote.com can help determine if this approach makes sense for your situation.
All loans offered under the new refinance schemes are fixed-rate, ensuring a minimum reduction in monthly payments and avoiding issues related to adjustable rates.
Should You Refinance Through ‘RefiNow’ or ‘Refi Possible’?
Timing your refinance is critical, particularly for low-income borrowers seeking to lower monthly payments. With concerns about rising interest rates, you might wonder if you should refinance now or wait for new schemes to roll out.
‘RefiNow’ is available starting June 5, 2021, providing immediate opportunities for lower interest rates and reduced monthly payments for low-income borrowers. For Freddie Mac mortgages, the new ‘Refi Possible’ scheme will begin in August. If competitive rates are available now, refinancing immediately could be advantageous. However, the benefits of the scheme may outweigh the risks, making it worth waiting until August.
If your mortgage is backed by Fannie Mae or Freddie Mac, you could benefit from these new schemes. Check your eligibility with a mortgage broker to see if refinancing can lower your monthly payments.
Summary
The new Fannie Mae ‘RefiNow’ program launches on June 5 and is tailored to low-income borrowers who have previously struggled with refinancing. An estimated 2 million homeowners missed out on refinancing opportunities last year. The ‘RefiNow’ scheme aims to remove barriers and help reduce monthly payments for these borrowers.
Eligibility for refinancing under this scheme requires an income at or below 80% of the area median income, and the new loan must reduce monthly payments by at least $50. Generally, a FICO credit score of 620 and a debt-to-income ratio of 65% or lower are needed.
Freddie Mac’s ‘Refi Possible’ program will begin in August and offers similar benefits. Both schemes are regulated by the FHFA.
Low-income borrowers can apply through participating lenders, many of whom are adopting these programs. Mortgage brokers like MortgageQuote.com can assist in navigating these options, finding favorable rates, and managing the application process.
Refinancing can offer significant savings, but it’s important to weigh potential downsides such as higher long-term costs and closing fees. The new schemes address many of these issues, making refinancing a viable option for those who qualify.
To apply, determine if your loan is backed by Fannie Mae or Freddie Mac using lookup tools or a mortgage specialist. If eligible, you can apply through us to potentially lower your monthly payments.
Choosing Between ‘RefiNow’ and ‘Refi Possible’
This guide helps you choose between ‘RefiNow’ and ‘Refi Possible,’ two refinancing options designed to assist homeowners. We’ll explore the benefits and limitations of each to help you make an informed decision.
Understanding RefiNow and RefiPossible
RefiNow offers immediate refinancing with low rates, helping homeowners reduce monthly payments. RefiPossible is tailored for low-income households, with more flexible eligibility and potentially lower costs.

Pros and Cons of RefiNow
Pros:

• Access to low-interest rates and reduced monthly payments.
• Potential long-term savings and faster equity building.
• Streamlined refinancing process.

Cons:

• Upfront costs and closing fees.
• May not be beneficial if planning to sell the home soon.
• Eligibility requirements vary by lender.

Pros and Cons of RefiPossible
Pros:

• Flexible eligibility for low-income households.
• Potential for lower monthly payments and assistance with closing costs.

Cons:

• May have slightly higher interest rates.
• Possible stricter income and credit requirements.
• Consideration needed for long-term financial goals.

Factors to Consider
Assess your financial situation, including income, credit score, and debt-to-income ratio. Consider your long-term plans and financial goals. Evaluate whether immediate savings or long-term benefits are more important.

Evaluating Your Financial Situation

• Review your income and expenses.
• Check your credit score.
• Calculate your debt-to-income ratio.
• Assess your home equity.

Tips for Making an Informed Decision

• Research and compare lenders.
• Consider long-term savings.
• Seek professional advice.
• Review the terms and conditions carefully.

A mortgage expert can provide personalized advice and help navigate the refinancing process. They can assess your options, ensure you meet eligibility requirements, and guide you through the application.

Deciding between ‘RefiNow’ and ‘RefiPossible’ requires careful evaluation of both options. By understanding the benefits and drawbacks, assessing your financial situation, and seeking expert advice, you can make a choice that aligns with your financial goals. Whether you choose ‘RefiNow’ or ‘RefiPossible,’ refinancing can be a powerful tool to save money and achieve your homeownership objectives.