Refinow: Fannie Mae Guidelines

Are you considering refinancing your mortgage and exploring different options available in the market? One option worth considering is the RefiNow program by Fannie Mae. This innovative program is designed to help low-income borrowers refinance their existing mortgage loans, offering potential benefits and savings. In this article, we will delve into the details of the RefiNow program, discussing its features, eligibility criteria, and advantages. By understanding how RefiNow works, you can determine if it is the right refinancing solution for you.

Introducing the Fannie Mae RefiNow Mortgage

The Fannie Mae RefiNow Mortgage is an excellent refinance option for homeowners or borrowers looking to lower their mortgage payments. It offers a new opportunity to make refinancing possible even if the homeowner does not meet traditional criteria.

The RefiNow program considers local area median income and other factors such as the borrower's credit history and current interest rate. It also allows homeowners to look at different types of mortgages to find one that best suits their needs. This makes it easier to decide if a refi is right for them. With Fannie Mae backing the program, homeowners can be sure they are getting a great deal on their mortgage while helping support two of the most trusted names in mortgages.

Benefits of the Fannie Mae RefiNow Mortgage

There are numerous benefits to having lower rates and costs when managing finances. Besides the obvious benefit of saving money, a person can have more financial freedom and greater control over their budget. For some individuals, lower rates and costs can mean making larger purchases or investments that they might not have been able to do before.

Lowering the debt cost is another advantage of having lower rates and fees. The interest rate will be lower than the amount owed overall due to fewer finance charges. This is especially beneficial for those who need to take out large sums of money for emergencies or other significant expenses. Furthermore, lowering rates can also help reduce monthly payments, opening up more room in an individual's budget for other expenditures, such as food or entertainment.

Eligibility Requirements for the Fannie Mae RefiNow Mortgage

Homeowners seeking to refinance their existing mortgages may find Fannie Mae's RefiNow mortgage a fantastic option. To qualify, borrowers must hold a Fannie Mae mortgage, prove their homeowner status, and demonstrate low-income quality.

Lenders assist eligible borrowers in securing the best deal by utilizing the RefiNow program to offer competitive interest rates, lower monthly payments, and even new refinance options.

The Federal Housing Finance Agency (FHFA) has established stringent eligibility criteria to guarantee that borrowers have access to affordable and advantageous refinancing through the RefiNow program. This program allows homeowners to decrease their mortgage payments and make housing more affordable.

Do you qualify for a refinance mortgage?

Step 1: Only homeowners whose existing mortgage is held by Fannie Mae are eligible for the RefiNow mortgage. You may utilize the lookup tool to see if Fannie Mae owns your mortgage. Use the Freddie Mac search tool below to see if Freddie Mac owns your mortgage if Fannie Mae does not hold it.

Step 2: Refinow is only available to borrowers whose income is 100% of the area median income (AMI) or less. This program is not available to Bill Gates or Jeff Bezos. Only low- and moderate-income homeowners are eligible for the RefiNow mortgage. Does your gross annual income meet the 80% threshold? Use the Fannie Mae income lookup tool to see if you meet the income guidelines.

Additional Guidelines for a Fannie Mae Refinance Mortgage

If you pass steps one and two, we'll move on to additional RefiNow refinance mortgage program requirements.

Single-family owner-occupied primary residences only. Two-, three-, and four-unit properties are ineligible.
No investment properties or second homes are permitted.
Borrowers' current income must be less than or equal to 100% of the subject property's area median income (AMI).
As of the new note date, the current loan must be 12 months old but no more than 120 months old.

Housing payment history for an existing mortgage

No missed mortgage payments on their current mortgage loan in the past six months, and no more than one missed
payment in the past 12 months

COVID-19 forbearance can cause people to miss payments, but if LL-2021-03 resolves those payments, they don't count as missed payments for meeting these payment history requirements.

Maximum LTV/CLTV of 97 percent. This means that after paying off the current loan (plus any additional loans, if necessary), there must be at least 3% equity remaining after adding in closing and prepayment expenses.
debt-to-income ratio, up to 65%. Debt-to-income is the lender's lingo for determining the ratio of monthly debt (i.e., car payments, credit cards, student loans) and comparing it to monthly income. For example, if a borrower earns $2,000 (gross) and pays out $1,000 monthly, the debt-to-income ratio is 50%. Add up your monthly loan payments and divide the monthly income by the monthly debt payments. ($1,000/$2,000 = 50%)
A minimum credit score of 620

The refinance mortgage must provide the following benefits:

The monthly payment must be lowered by at least $50.00.
There must be at least a 5% reduction in the new interest rate.
A $500 credit will be issued at closing if an appraisal is obtained.
An automated underwriting process must approve the refinancing.
Automated underwriting is computer software that assists lenders in determining whether or not to accept an application.

With the exclusions listed below, condo, co-op, and PUD developments do not need a project review.

Confirm that the project is not a condo or co-op hotel, a motel, a houseboat, a timeshare, or a project with segmented ownership.
Confirm that you have enough property and flood insurance.

Standard mortgage insurance is needed on all loans with a loan-to-value ratio above 80%. Monthly mortgage insurance is required if the equity is less than 20%.

Refi Possible by Freddie Mac

Freddie Mac, the Federal Home Loan Mortgage Corporation, provides the Refi Possible mortgage. Fannie Mae and Freddie Mac compete, yet their approval guidelines are alike, and Freddie Mac mirrors Fannie Mae's guidelines for Refi Possible.

Does Freddie Mac own your mortgage? Use the Freddie Mac lookup tool.

Conclusion

In conclusion, the RefiNow program offered by Fannie Mae presents an excellent opportunity for eligible low-income homeowners to refinance their mortgage loans and potentially save on their monthly payments. With features like reduced fees, simplified income documentation, and expanded debt-to-income ratio limits, RefiNow aims to make refinancing more accessible and affordable. If you meet the eligibility requirements, exploring this program with the assistance of a knowledgeable mortgage professional can help you take advantage of the benefits it offers. Make an informed decision and consider refinancing your mortgage through the RefiNow program to achieve greater financial stability and savings.

SOURCE:
Refinow™ is an Affordable Refinancing Option
Refinow: Expanding Refinance Eligibility for Qualifying Homeowners