Refinance activity is at historic highs. And why not? Rates are close to historic lows. But not everyone has taken advantage of this yet Why not?
Most homeowners that haven’t refinanced haven’t done so because they can’t quite qualify for the refinance. Imagine how frustrating that is. Common reasons are that they don’t earn enough, or have credit issues.
The Federal Housing Finance Agency (FHFA), the parent of Fannie Mae and Freddie Mac, has decided to help you out. They recognize that someone who is making their payments on time is probably a good credit risk, even if they don’t quality using traditional yardsticks. Today (Wednesday, April 28th) they announced a new program to be launched this summer called the “RefiNow” program.
The enhancements to traditional conforming loan programs include:
- Credit scores as low as 620
- Mortgage lates in your credit history are fine, as long as you’ve paid on time for the last 6 months and have had no more than one late payment in the last 12 months. (This is huge!)
- $500 credit toward your appraisal fee in certain cases
- Your debt ratio (total monthly obligations divided by your gross monthly income) can be as high as 65%, compared to 45% for a traditional conforming loan (This is huge, too!)
- The adverse market fee of 0.500% of the loan amount – a fee charged on all conforming refinance loans since last year – will be waived on loan amounts under $300,000. (This is huge, too! On a $250,000 loan, this means $1,250 in up-front savings!)
There are some eligibility restrictions:
- You must earn less than 80% of the area’s median income
- Your loan amount cannot exceed 97% of your home’s value
Besides helping those who earn less than the average wage earner in their area, this could be a huge boon to small business owners who tend to write off most of their income. Something to think about.
This program is expected to launch this summer, and any mortgage company who writes conforming loans may participate.
If you want to know more about this program, contact me and let’s discuss if you’re eligible.
Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)
Mortgage Advisor, C2 FINANCIAL CORPORATION
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