A mortgage refinance can lower interest rates, reduce monthly payments, and help you meet your financial goals. Unfortunately, many low-income homeowners have not been able to take advantage of the competitive market. Recently, Fannie Mae and Freddie Mac have announced new refinance options for low income earners that can now open the door for a lot of people who did not qualify in the past. Continue reading below to discover if these programs are the key to saving you money!

Who are Fannie Mae and Freddie Mac?

You’re not alone if the names Fannie Mae and Freddie Mac had you questioning whether you were dealing with cartoon characters or home mortgage companies. Fannie Mae and Freddie Mac are both federally backed organizations that buy mortgages from other lenders.

Historically, they’ve helped increase the availability of mortgage credit and financing opportunities for home buyers. Today, you probably know them as a mortgage provider for you or someone close to you.

Why are there new refinance options for low income earners, and what are the benefits?

In 2020, millions of homeowners lowered their monthly payments by refinancing their current mortgages. However, many lower-income borrowers missed out on savings because of low credit scores or closing costs.

The new refinance options for low income earners recently introduced will bridge the gap by offering reduced closing costs and allowing more individuals with higher debt-to-income ratios or lower credit scores to participate.

Overview of Fannie Mae RefiNow

Fannie Mae RefiNow can help homeowners that may not have qualified for programs in the past to save money. Eligible individuals with a debt-to-income ratio of up to 65% will receive a minimum of $50 a month off of their mortgage payments and reduce interest rates by at least 0.5%. Credits and appraisal waivers can also help cover additional refinance costs.

Overview of Freddie Mac Refi Possible

Freddie Mac Refi Possible is a mortgage program that allows low-income homeowners to refinance and save. Borrowers whose income is at or below 80% of their area’s median income may be eligible for a 0.5% point interest rate reduction and a decrease in monthly mortgage bills by at least $50 a month.

Comparing Fannie Mae RefiNow and Freddie Mac Refi Possible

Both programs are targeted toward low-income homeowners who have struggled in the past to refinance their loans, and each can reduce interest rates and monthly payments.

However, Fannie Mae RefiNow allows borrowers to cash out up to $250 during the process, whereas Freddie Mac Refi Possible is a no cash-out loan. To qualify for these programs, you must have loans guaranteed by Fannie Mae or Freddie Mac.

Take advantage of these new refinance programs

New refinance options for low income earners are opening doors for people who may not have been able to take advantage of the competitive market. The Fannie Mae RefiNow and Freddie Mac Refi Possible programs are great news for homeowners that have not qualified for refinance loan options in the past.  Don’t let low income, high debt, or a low credit score keep you from experiencing possible savings. To find out if you’re eligible to take advantage of these new programs, reach out to me today!