Refinancing has often been difficult for those with tight budgets or higher debt. But these are the exact homeowners who can often benefit from calculated refinance savings. RefiNow™ and Refi Possible® are aimed at low- and middle-income homeowners as affordable refinance programs.
AFFORDABLE REFINANCE PROGRAM OPTIONS
RefiNow™ from Fannie Mae and Refi Possible® from Freddie Mac are the same program offered under different names by the nation’s most prominent conventional mortgage backers.
These programs were originally mandated by the Federal Housing Finance Agency (FHFA), the regulator for the government-sponsored entities (GSEs). The goal is to make refinancing possible for low- to median-income homeowners struggling with debt to lower monthly mortgage costs and try to improve their financial picture.
REFINOW™ AND REFI POSSIBLE® BENEFITS
For those who qualify, there are several benefits to both RefiNow™ and Refi Possible®:
- Borrowers with higher debt-to-income ratios can qualify. These loan products allow homeowners with debt-to-income ratios (DTI) of up to 65% to qualify. Even with a big car loan or other debt, you may still qualify to refinance at a lower rate due to looser DTI rules.
- You need minimal equity to refinance. You may be able to refinance with as little as 3% equity in your home.
- You may qualify for an appraisal credit. If you need an appraisal to place a value on your home, you’ll receive a $500 credit toward that appraisal.
- There’s less paperwork required from your end. You can verify your income with a pay stub and/or W-2. If you’re self-employed, you may just need 1 year of your personal tax returns and business tax returns.
UNDERSTANDING GOVERNMENT REFINANCING PROGRAMS
As part of the government conservatorship that resulted from the 2008 housing crisis, the GSEs have an implied government guarantee. Because the GSEs are in conservatorship, they can offer programs that expand refinance access for eligible borrowers.
This isn’t the first time, either. From 2009 – 2018, the Home Affordable Refinance Program (HARP) opened up refinancing to those who lacked equity based on falling property values. While RefiNow™ and Refi Possible® aren’t direct government loans, the backing allows for higher DTI limits and increased eligibility for clients.
CHECK ELIGIBILITY FOR REFINOW™ OR REFI POSSIBLE THROUGH FANNIE MAE OR FREDDIE MAC
We’ll get into the guidelines in more depth below, but the first requirement for these programs is that your mortgage investor must be Fannie Mae or Freddie Mac. You can determine whether your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following websites:
REFI POSSIBLE® AND REFINOW™ GUIDELINES
Once you’ve determined who owns your loan, here are more detailed requirements.
BORROWER ELIGIBITY
To qualify for this loan option, borrowers must meet the following criteria:
- You have to make 100% or less of the area median income where you’re looking to buy.
- Your DTI must be 65% or less.
- While neither program requires a minimum credit score, lenders can set their own. Giving Tree Lending requires a 580 qualifying score.
- Both programs require no late mortgage payments in the last 6 months and no more than one in the last year.
LOAN REQUIREMENTS
When it comes to the loan terms themselves, here’s what you need to know:
- Fannie Mae or Freddie Mac must own your home loan.
- You need at least 3% existing equity in your home.
- You need to have been in your existing mortgage for at least a year.
- This refinance must lower your rate or change your term, with cash back limited to $250.
PROPERTY ELIGIBITY
Here are the basic property requirements you should be familiar with:
- You must be refinancing a one-unit primary residence.
- Co-ops are ineligible.
WHAT TYPES OF REFINANCE PROGRAM DOES GIVING TREE LENDING OFFER?
We’ve gone over Refi Possible® and RefiNow™, but there are other options you can look at:
- Fixed-rate refinance loans: The interest rate remains the same for the life of the loan. In addition to rate/term refinances, you can take cash out by refinancing your primary mortgage with a fixed-rate loan.
- Adjustable-rate refinance loans: Also called adjustable-rate mortgages (ARM), these are rates that adjust after an initial fixed-rate period at the beginning of the loan. Adjustments are based on an index added to a margin, subject to caps and floors.
- FHA refinance loans: Instead of being backed by Fannie Mae or Freddie Mac, these are guaranteed by the Federal Housing Administration. FHA loans are known for similarly low equity requirements and more flexible credit guidelines.
- VA refinance loans: VA loans are available for eligible service members, veterans and surviving spouses. In addition to fairly flexible credit requirements, the real selling point here is that they typically don’t require equity, so you can potentially turn your full existing home value into cash.
Current refinance rates
You can check out our current refinance rates. These rates are based on assumptions and the current market appetite to invest in mortgage-backed securities. Although market factors play a role, it’s also going to be based on your personal qualifications including your remaining equity, your credit, and how you plan to occupy the home.
THE BOTTOM LINE: REFINOW™ AND REFI POSSIBLE® MAY MAKE YOUR MORTGAGE PAYMENTS MORE AFFORDABLE
RefiNow™ and Refi Possible® are refinancing options for low- to moderate-income homeowners allowing them to lower their rate or change their term when they might not qualify for other options. There are more flexible credit requirements and your DTI can be as high as 65%.
Interested in refinancing? Apply online for these and other loan options.