Fannie Mae recently announced the new RefiNow limited cash-out refinance option for homeowners. They have coordinated with Freddie Mac and worked under the guidance of the Federal Housing Finance Agency (FHFA). It is designed to help eligible borrowers with low-to-moderate income refinance their mortgage loan with a cash-back option.
The RefiNow program offers two key benefits to eligible homeowners:
- Lower Interest Rate—It allows borrowers to take advantages of today’s low-interest environment by providing a minimum of a 50-basis point reduction and a savings of at least $50 in the borrower’s monthly mortgage payments (inclusive of principal, interest and any applicable mortgage insurance).
- $500 Credit—A $500 credit is provided to the lender and must be passed onto the borrower at the time the loan is purchased (if an appraisal was obtained for the transaction).
The RefiNow program is not available to all homeowners. There are several eligibility requirements that borrowers must meet in order to qualify for this limited cash-out refinance loan.
- Must be used for a single-unit, principal residence
- Must be same borrowers listed on existing loan
- Current income at or below 80% of the area median income (AMI)
- No missed mortgage payments in the past six (6) months, and no more than one missed payment in the past 12 months
- Mortgage with a loan-to-value ratio up to 97%
- Debt-to-income (DTI) ratio of 65% or less
- Minimum 620 FICO score
Please note that the AMI is based on the borrower’s current income status, not their income when the original mortgage loan was purchased. This is important because life changes and things happen that may prevent a homeowner from qualifying for a traditional refinance. RefiNow opens up refinancing options to more borrowers who wish to lower their monthly mortgage payments. In addition, the $500 credit is another helpful bonus that can either be applied toward the closing costs or taken as cash back.
You can check out the Fannie Mae resource page to see if you are eligible, or you can contact Transparent Mortgage today. We’ll help you determine your eligibility and explore all your home refinancing options, including the RefiNow program. Call us anytime at (619) 701-3906.