In today’s housing market, many homeowners are looking for a home refinance or home improvement loan, but not everyone’s credit score is up to the challenge.
That’s why the Federal Housing Finance Agency, which regulates mortgage loan companies, Freddie Mac and Fannie Mae, has just announced a new federal program for people who are looking for home refinancing options but wouldn’t normally qualify for a traditional home refinance.
This federal program will allow people with high loan-to-value (LTV) ratios still making good on their mortgage payments to take advantage of today’s low home mortgage rates when normally they might not be able to qualify. Current rates rival those of 2012 when long-term options were as low as 3.31%.
“This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac,” FHFA director Melvin Watt said in a statement.
Of course, there are a few conditions. To be eligible for the home refinance rates, current homeowners:
- Must not have missed any mortgage payments within the past six months.
- Must not have missed more than one mortgage payment within the past 12 months.
- Must have a source of income. Just like the regular mortgage process, sticking with your employer is crucial, as any changes to your job or income status could delay or stop the refinance process altogether.
- Must benefit from the refinance plan in some way, such as a reduced monthly loan payment.
The new home refinances plan isn’t set to roll out until October 2017, however. In the meantime, Freddie Mac and Fannie Mae will extend the current Home Affordable Refinance Program (HARP) through the end of September 2017 to serve as a bridge to the new plan.
HARP was introduced in 2009 to help borrowers after the housing market crisis that accompanied the recession. Over 3.4 million people have already taken advantage of the program, and 300,000 more could still be eligible, according to the FHFA.
It’s not clear exactly how many borrowers will be eligible for the new high-LTV program once it starts up next year. One thing is for sure, though: just like an initial mortgage plan, lock in those refinance numbers as soon as you are comfortable with them.
And if you’re looking for attractive Nashville mortgage rates, contact HomeRate Mortgage anytime.