Here’s How Millions Of Homeowners Can Now Save On A Mortgage Refinancing
Mortgage refinancing often seems like a great idea but, unfortunately, it can also seem out of reach. But no more: A new government refinancing option is opening the door for millions of homeowners to rethink their monthly mortgage payment and start thinking about what they can do with their newfound extra cash.
Beginning this summer, Fannie Mae and Freddie Mac (the government-sponsored mortgage behemoths) will unveil a refinance option with reduced rates. With this new program, financially disadvantaged borrowers could save up to $250 per month.
Qualifying For Mortgage Refinancing
To qualify for this program you must:
- Earn no more than 80% of your area’s median income
- Have a federally backed mortgage
- Have no missed payments in the past six months
- Have no more than one missed payment in the past 12 months
- Meet specific requirements related to your level of debt and the equity in your home
- Have a credit score of 620 or higher
The lender will be required to reduce a qualified borrower’s monthly mortgage payment by $50 or more and provide at least a half-point interest rate reduction. The lender must also provide a credit of up to $500 for an appraisal, if needed, and waive the typical .05% fee for borrowers with loan balances at or below $300,000. You may be required to pay 3% or more of the amount you owe on your house in refinance fees, also known as “closing costs.”
How Much Can This Save Homeowners?
According to Mark Calabria, director of the Federal Housing Finance Agency, which regulates Fannie and Freddie, “This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment.”
Don’t qualify for the government’s new refi option? It might be worth your while to consider a standard refinancing, given that the average 30-year fixed mortgage rate has fallen below 3% again. Based on the lower interest rates that are popping up, 13 million mortgage holders could save $283 per month, on average.
Who Are The Best Candidates For Refinancing?
Black Knight, a technology and data provider, says that the best refi candidates have 30-year mortgages, at least 20% equity in their homes, and credit scores of 720 or higher.
If you’ve decided that a refi is something you want to pursue, it’s recommended that you check with at five lenders to find the best mortgage rate for your individual circumstance.