This program could potentially knock an already historically great rate such as 3.5% down to 3%.

The Federal House Finance Agency announced it is implementing a new refi product that targets low-income borrowers with single-family mortgages backed by Fannie Mae and Freddie Mac.  Under the new refi option, lenders must ensure that the borrower saves at least $50 a month in their mortgage payments while simultaneously dropping their interest rate by at least 50 basis points. For example, this could potentially knock an already historically great rate such as 3.5% down to 3% with the new product. The FHFA will also require that lenders provide a maximum $500 credit for an appraisal if the borrower is not eligible for an appraisal waiver. The GSEs will reimburse the lender once the loan is sold to them. “We look forward to implementing Fannie Mae’s new RefiNow option as soon as possible to ensure all eligible homeowners are able to avail themselves of this money saving opportunity,” Fannie Mae’s CEO, Hugh Frater, said in a statement. As part of the RefiNow program, the FHFA will also waive its controversial adverse market refinance fee for borrowers with loan balances at or below $300,000. To qualify for this option, beyond owning a GSE-backed mortgage, a borrower must have an income at or below 80% of the area’s median income and have been current of their payments for the last six-months, with no more than one payment missed in the last 12. Borrowers must also not have a mortgage with an LTV ratio greater than 97% and a DTI no higher than 65%. Lastly, borrowers must have a FICO score no lower than 620. The FHFA said it plans to make this product available to eligible borrowers as soon as possible, with a tentative date beginning this summer.

Source: HousingWire