The Federal Housing Finance Agency announced the expansion of Fannie Mae and Freddie Mac s refinance programs for low- and moderate-income borrowers Monday. These changes are set to increase affordability for homeowners and homebuyers in the U.S. with a focus on underserved communities.
The programs allow low and moderately-income borrowers with home loans backed by Fannie and Freddie. Now after receiving feedback on the effectiveness of the programs, the FHFA announced it would expand these programs and who is eligible for them.
In an effort to reduce the share of their income that they have to use for housing costs, FHFA Acting Director Sandra Thompson said: "This is a significant priority since we are seeing low-income borrowers paying rates that are 30% higher than other borrowers." The new changes enable more homeowners to qualify for refinance by expanding the loan eligibility options. The FHFA says it will make changes that will allow more lenders to offer the low-income refinance option for homeowners principal residence.
It also changed the income requirements for a low-income refinance. The new income threshold level will be increased from those whose current income is less than 80% of the area median income AMI to those who make less than 100% AMI, the FHFA said.
Expanding eligibility for low and moderate-income families to refinance their mortgage and reduce their monthly payments, together with leveraging desktop appraisals to reduce inefficiencies in the mortgage process, are meaningful steps towards overcoming barriers to affordable and sustainable homeownership, Thompson said. Today s actions demonstrate that FHFA will continue to act purposefully and in dialogue with its stakeholders to minimize market disruption and ensure its regulated entities operate in a safe and sound manner. If you are interested in saving on your monthly payment through refinancing your mortgage loan amid today's low interest rates, visit Credible to compare multiple lenders at once and find the one with the best mortgage rate for you.
Thompson spoke about the expansion of credit, which means creating programs or loosening regulations that allow lenders to extend home loans to borrowers with a less-than-perfect credit score or non-traditional credit profiles. This could include self-employed borrowers, the credit invisible or those who have never used credit but have never been late on payments.
However, Thompson emphasized that while it is important to expand credit access, it must be done in a safe and sustainable way.
Certainly, placing a borrower in a loan they are not able to repay is irresponsible, she said. When I say sustainable access to credit, as a lifelong regulator, I mean broad access to credit. Using the refinance option, FHFA is estimated to save between $100 to $250 on mortgage payments. It also pays for the appraisal cost if needed, saving homeowners an estimated $500 in closing costs.
We have a duty to eliminate barriers to sustainable homeownership and affordable housing, and all of our policies are built on those twin pillars of sustainability and affordability, Thompson said.
Is it possible to get a mortgage refinance and check on your eligibility.
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