New Refinance Loans Coming Soon
A new refinance loan option will be available in the coming months. There are some income limits and other restrictions, but if you qualify, the interest rates will be lower than those available to people who do not qualify.
Here’s what you need to know.
The Federal Housing Finance Agency (FHFA), which is the government agency that oversees Fannie Mae and Freddie Mac, the two companies that purchase mortgage loans from lenders, announced that they are introducing a new mortgage product for low-income borrowers who currently have a mortgage that was sold to Fannie Mae or Freddie Mac.
Here is what we know so far about the requirements.
- The new loan must lower your current mortgage payment by $50 per month.
- The interest rate must be at least .50% less than your current rate.
- If we need an appraisal, we will refund you up to $500 for the cost of the appraisal.
- There is no adverse market fee (a fee that increases your interest rate if you get a regular refinance) if your loan balance is below $300,000.
- The property must be one-unit and owner-occupied.
- Your current loan must be backed by either Fannie Mae or Freddie Mac (contact us to find out if your mortgage is backed by either of those companies).
- Your income must be below 80% of the Area Median Income. In Metro Denver, you must earn $80,000 or less. In Boulder, you must earn $92,080 or less. Other areas have different income limits.
- You cannot have had any late payments on your current mortgage for the past 6 months, and no more than one late payment in the past 12 months.
- You must have at least 3% equity in your house (the new mortgage can’t be greater than 97% of the value of the house).
- Your debt-to-income ratio must be lower than 65%. This is much higher than the normal debt-to-income ratio.
- You must have at least a 620 credit score.
No date has been set for when this new mortgage option will be available, but the FHFA expects it to be sometime this summer. As more details are announced, we will let you know.
If you need a mortgage pre-approval to purchase a house, or if you want to save some money by refinancing your current mortgage, contact us and we’ll show you how easy it is to get a mortgage.