Low Income Refinancing? Refi Possible could help
Refinancing a mortgage can get expensive, especially when you consider the upfront costs involved.
But a new program should make the refinancing process more affordable.
Freddie Macs Refi Possible enables you to take advantage of lower mortgage rates and reduce upfront refinancing costs.
If you have a low to middle income and your current Freddie Mac mortgage is covered, you might be eligible.
Check your low income refinancing eligibility. Start here (11/17/2021)
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What is refi possible?
Freddie Mac recently launched a mortgage program called Refi Possible.
The new loan is designed to help lower-income mortgage borrowers pay less for refinancing and benefit from the current low interest rates.
“Many people are struggling during the pandemic. Many yearn to refinance but worry that they won't be able to lower their interest rate or pay the closing costs of the refinance, "said Mayer Dallal, executive director of California mortgage lender MBANC.
“This program is designed to help homeowners who would otherwise be thwarted by the high up-front costs of a refi crisis,” continues Dallal. "If you qualify, you can lower both your monthly payment and your interest rate."
Benefits of the Freddie Mac Refi Possible Program
The Refi Possible program offers great benefits to eligible borrowers.
You could lower your interest rate, pay less mortgage charges every month, and possibly pay nothing for an appraisal (in case the lender requests one). This can save you a few hundred euros in advance.
With a Refi-Possible refinancing, you can count on lower monthly mortgage payments as your interest rate is guaranteed to be reduced by at least 50 basis points (0.5%).
Let's say your current interest rate is 3.75% and you are eligible for Refi Possible. In that case, your new interest rate would be 3.25% or even lower.
If your transaction requires a revaluation, the costs will be paid additionally. This is because a review loan is granted by your lender and it is passed on to you when you purchase your new loan.
Brett Bivenour, chief technology officer at FasterFi in Melville, New York, says "a good candidate" for the refinance. Possible refinancing is a borrower who:
A mortgage loan balance of $ 600,000 or less. A credit score of 620 or greater and wants to create more finance and savings opportunities
By reducing your monthly housing costs, Refi Possible can free more of your budget to pay off debts, invest in pension funds and other savings accounts, and cover daily expenses.
Check your low income refinancing eligibility. Start here (11/17/2021)
How the refi is possible Program works
If you are interested in the Refi Possible program there are a few steps you should take to verify your eligibility.
First, you'll need to confirm that Freddie Mac owns or is securitizing your current loan. Use the handy Freddie Mac Mortgage Loan Finder tool to check this out.
Next, you need to use Freddie Mac's Income and Property Eligibility Tool to determine if you are within your area's average income limits and if your home is eligible.
Fortunately, Freddie Mac recently expanded its Refi Possible program to include those earning 100% or less of their area's median income, up from the previous 80% limit.
That means more homeowners are now eligible and you don't need an extremely low income to qualify.
Finally, you want to contact your current lender or mortgage service provider.
Note that Freddie Mac does not lend directly to consumers. So you need to do the Refi Possible refinance with your existing lender; or, if it does not participate in this program, choose a participating lender.
Requirements to qualify for Refi
Note that there are several qualification requirements in order to obtain a Refi-Possible Refinance Loan. You need to:
Have a conventional mortgage loan owned by Freddie Mac Have a single family home as a primary residence Have an income below the current limit, which is currently 100% of your area's median income (AMI). Have a current credit score of at least 620. Have no missed mortgage payments in the past six months and no more than one missed payment in the past 12 months. Have a loan-to-value ratio of 97% or less. Have a debt-to-income ratio of 65% or less
Dallal warns that you are also not allowed to add or remove borrowers to your refinance loan. Additionally, no vacation properties or second homes qualify for the program.
Fortunately, Freddie Mac recently made it easier to qualify for a Refi Possible loan.
The agency lifted its 10-year credit limit and removed the $ 5,000 cap on closing costs, prepaid items, and points funding.
Plus, you no longer have to cut your monthly mortgage payments by at least $ 50 – any amount of reduction is now allowed.
Check your refinancing eligibility. Start here (11/17/2021)
Freddie Mac Refi Possible Cons
A disadvantage of Refi Possible is that you are not allowed to do any cash-out refinancing with this program. The maximum cash you can withdraw upon completion is $ 250.
The biggest caveat, of course, is that your Freddie Mac mortgage loan must be covered.
So, if you have a Fannie Mae backed loan, or an FHA, VA, or USDA mortgage loan, you won't qualify for Refi Possible.
Fortunately, there are plenty of other refinancing options worth pursuing when Freddie Mac's Refi Possible isn't the right choice.
Alternative low-income refinancing options
If you're not eligible for the Freddie Mac Low Income Refinance Loan, don't panic: there are alternative options you may be able to pursue, including:
Fannie Mae RefiNow – Does Fannie Mae own or certify your mortgage loan? You may be able to get one Refinow Refinowthat offers similar benefits and has some of the same eligibility requirements as a Refi Possible RefinancingOptimize refinancing or IRRRL – Do you currently have a VA loan or an FHA home loan? Consider each of them Low Interest Rate Refinancing Loans (IRRRL) or FHA are streamlining refinancing. Both programs require less red tape when it comes to the underwriting and loan documentation of the borrower. This enables the refi process to run faster (however, closure costs may still apply)Standard conventional refinancing – If you have an unsecured loan, conventional refinancing can potentially lower your interest rate and charge lower costs with more flexibility than other refinancing optionsLoan modification – You may have suffered a loss of income and are not eligible for standard refinancing. In this case, you should consider the following: Modification of the mortgage loan. This is where your lender agrees to modify the terms of your mortgage to avoid default and reduce your monthly payments. A loan modification does not replace your current mortgage loan or your lender, but it will restructure your loan to make it easier to use if you are struggling to make your mortgage payments
Check your refinancing options. Start here (11/17/2021)
Worth Refi Possible?
Provided you're eligible, refinancing through Refi Possible can be a smart strategy to lower your interest rate and lower your monthly mortgage payments.
This can make a huge difference in your personal finances over time.
"Borrowers whose income is at or below the median for their region, who have decent creditworthiness, and whose payments have been on time in recent months can access historically low interest rates without worrying about closing costs and other expenses. who eat up their savings. ”“ explains Bivenour.
He adds that the savings you get with a Refi Possible refinance can go a long way toward helping you meet other financial goals, such as:
Finally, remember that your chances of being eligible have probably increased, as Freddie Mac recently raised the area's median income limit from 80% to 100%. That's an added incentive to check your eligibility and see what you could save.
Confirm your new plan (November 17, 2021)