More than 2 million homeowners who thought they couldn’t afford refinancing, which could provide big savings over time but require a little money up front, can get cheaper loans this summer with a new government option.
This allows more borrowers to refinance modern, historically low mortgage ratesand cut their monthly housing costs by hundreds of dollars.
The new option allows borrowers to save up to $ 3,000 per year.
Government-funded mortgage giants Fannie Mae and Freddie Mac have launched a low-interest refinancing program that could save financially troubled borrowers up to $ 250 a month.
“There was a surge in refinancing last year, but more than 2 million low-income families did not take advantage of record-low mortgage rates through financing,” said Mark Calabria, director of the Federal Housing Finance Agency, which regulates Fannie and Freddie.
To qualify, borrowers must have a federally backed mortgage and earn no more than 80% of the median income in their area.
The lender will have to cut the monthly mortgage payment to the qualified borrower by $ 50 or more and ensure that the interest rate is reduced by at least half a point (0.5) – say, from 3.5% to 3%.
“This new refinancing option is designed to help eligible borrowers who have not refinanced yet save between $ 1,200 and $ 3,000 per year on mortgage payments,” Calabria said in a statement. news release when the program was first announced.
The program reduces the cost of ref.
Refinancing costs vary by state and lender, but it’s not uncommon to pay 3% or more of the amount you owe one of your homes as a refinancing fee: “closing costs”.
If you qualify for the new FHFA program, your lender must provide a loan of up to $ 500 to conduct an appraisal if you need one, and waive the usual 0.5% commission for borrowers with loan balances of less than $ 300,000 USA.
But in order to be eligible, you must not have missed a payment in the last six months and have no more than one missed payment in the last 12 months.
In addition, you must meet certain requirements regarding how much the debt that you carry and how much capital you have at home.
Finally, you cannot have a credit rating below 620. If you are not sure if your rating will work, it’s easy see your credit score for free…
They have no right to? You can still save on refi
If you are not eligible for the new government refinancing option, you may still consider swapping your loan for a cheaper one. According to Freddie Mac, 30-year fixed mortgage rates averaged just 2.86% this week, and that’s not far from an all-time low of 2.65%.
Nearly half of homeowners who refinanced minimum rates in the last year are now saving $ 300 a month or more. recent Zillow poll found.
Top candidates for refinancing have 30-year mortgages and at least 20% of the home equity built into their homes, according to information and technology company Black Knight. Those homeowners who hit the sweet spot also have a credit rating of at least 720.
If you are considering refinancing, check mortgage rates from at least five lenders to ensure maximum savings.
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If refinancing isn’t right for you, there are other ways to save on housing costs. When it’s time to renew your homeowners insurance, get rate quotes from multiple insurers to make sure you are getting the coverage you need at the best price.
This article provides information only and should not be construed as advice. Provided without warranty of any kind.