Both Fannie Mae and Freddie Mac have rolled out refinance programs to help low- to moderate-income households take advantage of lower mortgage rates. Borrowers whose income does not meet the area’s median income thresholds could still be eligible if they can meet some other requirements.
Launched in June by Fannie Mae, the RefiNow program targets low- to moderate-income borrowers who might otherwise struggle to get a loan. The program recently increased the income limit for qualifying and loosened some other requirements to make it easier for more borrowers to participate. Freddie Mac also rolled out a similar program with similar requirements called RefiPossible.
The changes “are broadening the population that can qualify and are making the transactions have less friction,” said Mike D’Ambrosio, Director of Credit Risk at Better.com. Households whose earnings are not above their area’s median income are generally eligible if they can meet some other requirements. When the program first launched, the income limit was 80% of that local median amount.
The programs eliminated the requirement that the loan could not be older than 10 years. A cap on closing costs also was removed, and payment reduction can be of any amount instead of a minimum. However, lenders must provide a rate cut of at least 50 basis points (half a percentage point). Additionally, borrowers must have a debt-to-income ratio below 65% and a FICO credit score of at least 620.
For any specific questions in regards to refinancing and investor specific loan programs, always feel free to contact me directly with any questions!