What is Fannie Mae Refinow Program?

A man holding a sign that says, “refinance your mortgage”Exploring refinancing options, primarily through Fannie Mae's RefiNow program, has become a focal point for homeowners seeking to optimize their mortgage terms. The RefiNow initiative, backed by Fannie Mae, aims to make refinancing more accessible and affordable for low-income individuals.

Understanding the guidelines and program specifics is crucial for those looking to leverage RefiNow's benefits. This program offers potential savings and addresses income limits to accommodate a broader range of applicants.

Navigating through the RefiNow guidelines provides valuable insights, empowering homeowners to make informed decisions about refinancing their Fannie Mae loans.

What is the RefiNow Program?

RefiNow is a mortgage refinancing option from Fannie Mae, one of the nation's largest housing finance agencies. It provides an easier path to refinancing for creditworthy borrowers whose incomes are at or below their area median.

Key features include:

  • No maximum loan-to-value ratio
  • Option to include closing costs in the loan amount
  • There is no minimum credit score requirement.
  • Available for both single-family homes and condos
  • Debt-to-income (DTI) ratios up to 65%

RefiNow opens refinancing to homeowners who may not otherwise qualify by removing barriers like home equity and credit score requirements. This allows them to take advantage of lower interest rates and reduce their monthly mortgage payments.

Who Can Qualify for a RefiNow Loan?

To qualify for a RefiNow mortgage refinance, borrowers must meet specific eligibility criteria:

  • Income at or below the area median income limit
  • No missed mortgage payments in the past six months
  • Existing loans owned or securitized by Fannie Mae
  • At least 12 months of seasoning on the current mortgage
  • Mortgage payments reduced with refinancing

The program is intended to help creditworthy low- to moderate-income households reduce their housing costs. Fannie Mae provides an online lookup tool to determine eligibility for your current mortgage.

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.
  • If an appraisal is obtained, a $500 credit will be issued at closing.
  • 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%.

Benefits of Refinancing with RefiNow

The primary benefits of refinancing an eligible mortgage through the RefiNow program include:

  • Lower interest rates to reduce monthly payments
  • Including closing costs in the new loan amount
  • There is no home equity requirement.
  • Flexible credit score guidelines
  • Streamlined application process

This can result in hundreds of dollars in monthly savings for eligible homeowners. Closing costs can also be wrapped into the new loan balance.

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.

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.

Potential Drawbacks to Consider

While it expands access, RefiNow does come with some limitations:

  • Limited to Fannie Mae-owned loans
  • Some mortgage insurance restrictions
  • Additional interest and costs from closing costs
  • Variable savings amounts based on rate spread

Homeowners must weigh savings against extra costs by wrapping closing costs into the refinanced loan amount. The program is also only available for existing Fannie Mae loans.

Is Refinow the Right Choice?

RefiNow provides an excellent opportunity to refinance and lower housing costs for low- to moderate-income households with Fannie Mae mortgages. However, it is essential to calculate your potential savings and evaluate other refinance options. Speaking with a loan officer can help determine if RefiNow is the most beneficial program for your financial situation.

Exploring New Refinance Options for Lower-Income Borrowers

With programs like Refi Possible from Freddie Mac and RefiNow from Fannie Mae, lower-income borrowers may have new refinance options if Freddie Mac or Fannie Mae own their existing mortgage. To qualify, the lender must verify homeownership and income requirements set by the Federal Housing Finance Agency (FHFA).

Lenders can use the loan lookup tool to see if borrowers with credit scores as low as 500 and a debt-to-income ratio up to 65% qualify to refinance and lower their mortgage interest rate. If borrowers have not missed a payment in the past 12 months and the home appraises for the new refinance amount set by the FHFA, they may benefit from these new refinance options tailored for lower-income borrowers.

Conclusion

Finally, the Fannie Mae RefiNow program is a significant endeavor to assist low-income homeowners in refinancing their mortgages and lowering their monthly payments. With less complicated qualifying standards and reduced fees, the initiative seeks to increase refinancing accessibility for those who would have been previously disqualified.

The extension of this program might provide significant relief to many homeowners having difficulty making their exorbitant mortgage payments. As more qualifying homeowners know its advantages, RefiNow may be critical in maintaining housing stability and financial security for people and families.

We urge qualified homeowners to investigate this chance and benefit from the support offered by Fannie Mae's RefiNow program.

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