Mortgage

HIRO Mortgage Program 2020: The refinancing choice for prime LTV

What is the HIRO mortgage program?

The Fannie Mae High LTV Refinance Option (HIRO) is a mortgage relief program.

It is intended for homeowners who want to refinance at today's low interest rates but don't have enough equity to do a traditional refi.

The HIRO program can help homeowners who have not benefited from rising house values ​​in recent years and are faced with high rates.

If you have bought a house since the end of 2017 and made a small down payment, you can benefit greatly from this program.

Find out if you qualify for the HIRO program (July 30, 2020)

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How the HIRO Refinancing Program Works

The Fannie Mae High LTV Refinance Option (HIRO) is designed to help borrowers with little or no equity.

In fact, it can help some underwater borrowers – borrowers who owe more for their homes than the property is worth.

While a lack of equity is a problem for millions of homeowners, there is also a less visible problem.

Low equity owners are often faced with expensive mortgages that cannot be refinanced at today's interest rates.

With the HIRO program, these homeowners may be able to set a lower interest rate and cheaper mortgage payments.

Check your HIRO funding eligibility (July 30, 2020)

Example of a high LTV refinancing

For example, if you bought a 3% decline home with the Fannie Mae HomeReady loan in late 2017, your situation may look like this:

Original Purchase Price: $ 250,000 Deposit: $ 7,500 (3%) Current Credit Balance: $ 238,000 Current Value: $ 245,000 Current Credit Value: 97.14%

In this scenario, your credit to value ratio would be too high for traditional refinancing. However, you may be able to qualify for high LTV HIRO refinancing.

As interest rates drop, the Fannie Mae High LTV refinancing option can lower your monthly payment and free up the cash you need in your budget.

Why is Fannie Mae easing credit requirements under this program?

After all the documents have been mixed, the borrower has lower monthly costs or a better credit. And Fannie Mae has a borrower with a good balance of payments that is less risky.

Who qualifies for HIRO?

Only homeowners who currently have a mortgage covered by Fannie Mae can qualify for HIRO refinancing. If you're not sure if Fannie Mae supports your loan, use Fannie's lookup tool to find out.

Further requirements for the option for high LTV refinancing are:

The mortgage was taken out on or after October 1, 2017. You held the mortgage at least 15 months before applying for HIRO. You haven't paid more than 30 days late in the past 6 months. You have not made more than one payment up to 30 days late in the past 12 months and have made no payments more than 30 days late

In addition, the HIRO refinancing must have a “material net benefit” for the homeowner.

This means that the loan must have at least one of these four advantages:

Reduced monthly principal and interest paymentsLower interest rateShort amortization periodMore stable mortgage product, e.g. B. Transition from a floating rate mortgage to a fixed rate mortgage

If any of the above applies to you, you may be eligible for the HIRO mortgage program. Find out here.

Check your HIRO funding eligibility (July 30, 2020)

Minimum credit value ratio for the HIRO program

Fannie Mae tries to help good borrowers in areas with little or no appreciation. If you have too much equity, you cannot qualify for the HIRO program.

The current minimum mortgage lending rates (LTV) are:

Type of residence
Number of Units
LTV Required for HIRO

Main residence
1 unit
97.01% or higher
2 units
85.01% or higher
3-4 unit
75.01% or higher
Second home
1 unit
90.01% or higher
Investment Property
1-4 unit
75.01% or higher

Note that these are not maximums for the new loan. These are minimum amounts for your current loan.

Here are two examples of how the minimum LTV rule can be applied to a single-family home:

Example: Not eligible for a HIRO mortgage

Property Value Example: $ 300,000 Current Loan Balance: $ 260,000 Current LTV: 86% (LTV Ineligible)

Example: Eligible for a HIRO mortgage

Example of a property value of $ 300,000. Current credit balance: $ 295,000. TV: 98.3% (LTV eligible)

And remember, you are only eligible for Fannie Mae's HIRO program if your current mortgage is owned by Fannie Mae.

Maximum loan-to-value ratio for the HIRO program

Fannie Mae High LTV Refinance has no maximum LTV for fixed rate mortgages with a term of 30 and 15 years.

This means that your current loan can have an LTV of 125% or even 150% and you are still eligible.

For those who refinance a variable rate mortgage (ARM), the maximum amount is 105% of the property value.

When should high LTV funding be sought?

Even if you have a high credit and high income, it is difficult or impossible to refinance a home without equity.

It is true that house values ​​have increased. But not everywhere. Not all property prices have gone up.

Every community probably has places that have not valued much and perhaps not at all. In fact, there are entire metropolitan areas in which property prices have fallen on average.

According to ATTOM Data Solutions, around 3.5 million U.S. properties were seriously under water in the fourth quarter of 2019.

This means that every 16th homeowner has a mortgage loan portfolio that is at least 25% higher than the value of their home.

If you are one of these homeowners, HIRO may help you refinance at a lower interest rate.

Check your HIRO funding eligibility (July 30, 2020)

FAQ about the HIRO program

What is a HIRO mortgage?

HIRO is a mortgage refinancing program. HIRO stands for "High LTV Refinance Option" – a special refi program from Fannie Mae. If you have very little equity but want to refinance yourself into today's low mortgage rates, you may be able to take advantage of this loan. This could help lower your interest rate and make your monthly mortgage payment more affordable.

Who can use the HIRO program?

While the need for the Fannie Mae High LTV Refi Option is great, not all owners can qualify. Owners have to tick certain boxes to enter the program:

1. The current loan must belong to Fannie Mae. To determine if your loan is qualified, go to the Fannie Mae Lookup Tool

2. The loan must have been taken out on or after October 1, 2017

3. At least 15 months must have passed before the loan can qualify for the HIRO program. For example, according to Fannie Mae, the key date for the existing loan may be January 1, 2018, and the key date (key date) of the new loan must not be before April 1, 2019

4. You must have no 30-day late payment in the past six months, no more than 30-day late payment in the past 12 months, and no more than 30 days late payment

When does HIRO expire?

Fannie Mae has not set an expiry date for the HIRO mortgage program.

Are credit scores important with the High LTV Refinance Option?

With Fannie Mae High LTV Refi Option (HIRO) loans, there is no credit worries. Lenders are generally not required to consider credit scores. The reason is that the new loan finances a property where the borrower has a good financial past.

However, ask your lender. Just because Fannie Mae does not set a minimum credit rating does not mean that the lender cannot lay his own rules over Fannie Mae's guidelines.

Is there a debt to income ratio (DTI) for the HIRO program?

There is no limit to the debt to income ratio. The logic is that the borrower made full and timely payments and the new funding is likely to cut monthly costs.

Does the HIRO Mortgage Program Require Revenue Review?

The HIRO lender must meet one of the following requirements:

1. Oral review of current employment or self-employment for at least one borrower

2. Document non-employment income such as a pension

3. Documentation of the liquid financial reserves in the amount of at least 12 months of the new full housing benefit payment including taxes, insurance, etc.

The lender is not required to calculate a new debt-to-income ratio for refinancing unless your payment increases by 20%, you remove a borrower from the loan, or you trigger the alternative qualification path in some other way.

The alternative qualification path is any situation in which the lender has to re-qualify the loan because it differs significantly from the previous loan.

Do I have to provide bank statements?

Usually no, unless your payment increases by 20% or you remove a borrower

Does the HIRO mortgage need a valuation?

Fannie Mae will allow an assessment waiver for some loans. This is determined when you submit a full application to the lender. Waiving an assessment saves the applicant time and money by skipping the assessment process.

However, some HIRO loans require a new, complete assessment. However, since there is no maximum LTV, you don't have to worry that the estimated value is too low.

Does the high LTV refinancing option require mortgage insurance?

Existing mortgage insurance will be carried over to the new loan. If the current loan does not include mortgage insurance, no new PMI is required.

Can You Remove a Borrower With Fannie Mae's High LTV Program?

Yes, but you will need to qualify for the loan again. This means that you have to prove your income and reach the minimum credit rating of 620 and the maximum debt ratio of 45%. You cannot remove a borrower from all lenders.

Is the high LTV option a replacement for HARP?

Yes. HARP expired in 2018, so this program was introduced for those who have not used this program. You cannot use HIRO if you have used HARP.

Can I get the High LTV Refinance Option after using HARP?

No. If you have refinanced yourself with HARP, you are not allowed to use this program as it is intended for those who have had no chance of using HARP.

What about HIRO tariffs?

As with all loan options, it is worth looking around. The HIRO financing rates currently generally correspond to other refinancing options.

Apply now for the HIRO high LTV funding program

Fannie Mae works with lenders nationwide so there is no problem getting information about High LTV Refi Option.

If this type of refinancing means a lower monthly mortgage payment for you, there is no reason to delay. Talk to lenders now for information about HIRO.

Check whether you qualify for the HIRO program. Start here (July 30, 2020)

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