The Federal Housing Finance Agency is giving low-income homeowners who missed out on the refinancing boom last year another chance. FHFA announced a program this week that will help low-income homeowners with government-backed mortgages to refinance into a lower mortgage rate to reduce their monthly mortgage payments.
The program is geared to homeowners with single-family, Fannie Mae or Freddie Mac-backed mortgages. It could help qualifying borrowers save between $100 to $250 a month, according to the FHFA.
To qualify, borrowers must earn 80% or less of their area’s median income. Also, borrowers must be up-to-date on their mortgage payments and not have missed a payment over the last six months. FHFA has eased credit standards and waived certain fees so more homeowners can take advantage of lowering their mortgage payments through refinancing.
“Last year saw a spike in refinances, but more than two million low-income families did not take advantage of record-low mortgage rates by refinancing,” says Mark Calabria, FHFA’s director. “This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment.”
The program requires that lenders provide at least a 50-basis point reduction in the borrower’s interest rate. The program also includes up to a $500 credit from the lender for an appraisal if the borrower is not eligible for an appraisal waiver.
The program will launch this summer.
Source: Federal Housing Finance Agency