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Do you qualify for refi plan? |
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- The borrower cannot take out cash to reduce the balance on or pay off a second loan or home-equity line of credit, or HELOC.
• The borrower must have sufficient income to afford the new loan payments. A verbal verification of employment is required. If the borrower is self-employed, this verification may be obtained from a certified public accountant, or CPA, regulatory agency or other "disinterested third party." The lender may request a copy of a business license or other form of verification that the business exists. A paycheck stub, recent tax return or other form of income documentation may be required as well.
• No minimum credit score is required. However, borrowers whose credit is impaired may be offered a higher interest rate.
- The borrower must complete a standard loan application.
- An appraisal may be required.
- More information can be found on Fannie Mae's Web site.
Freddie Mac Relief Refinance Mortgage rules
Objective: Freddie Mac's Home Affordable Refinance program, known
as the Relief Refinance Mortgage, is designed to assist borrowers
who are current on their mortgage payments, but would benefit from
refinancing into a mortgage that would better position them for
long-term homeownership. The program may be used to reduce the borrower's
interest rate, shorten the loan repayment period or replace an adjustable-rate
mortgage, interest-only mortgage or balloon/reset mortgage with
a fixed-rate loan.
- To qualify, the borrower must have
an existing mortgage that is owned or guaranteed by Freddie Mac.
To find out whether Freddie Mac owns or guarantees your loan,
call (800) 373-3343, call your loan servicer or search for your
loan on Freddie
Mac's Web site.
- Borrowers can apply for this program
through their current loan servicer or any Freddie Mac-affiliated
lender. Borrowers who apply through their current servicer won't
have to have their loan re-underwritten in most cases, but borrowers
who switch to a different lender will have to have their loan
re-underwritten..
- The new mortgage can be a 15-, 20-
or 30-year, fixed-rate loan or an adjustable-rate mortgage with
an initial term of five, seven or 10 years. The loan must be fully
amortizing (i.e., not an interest-only or payment-option loan).
An existing fixed-rate mortgage may not be refinanced with an
ARM.
- The property may be a vacation/second
home if the existing mortgage was originated as a second-home
loan or the borrower now occupies the home as a principal residence.
- The property may be an investment
property if the existing mortgage was originated as an investment
property or the borrower now occupies the home as a principal
residence.
- The existing loan, new loan or both
may be a so-called "super-conforming"
loan limit within the applicable loan limit for the area.
- If the original loan is covered by
mortgage insurance, the insurer must agree to transfer the insurance
to the new loan.
- The new loan cannot be used to make
a payment on or pay off a second loan.
- Lenders are encouraged to use Freddie
Mac's automated valuation model, or AVM, to estimate the property's
current market value. Borrowers should ask whether a new appraisal
will be required.
- Borrowers may be able to finance an additional $5,000 or up
to 4 percent of the new loan amount, whichever is less, to pay
closing costs, financing costs or prepaid sums due at closing.
- Borrowers whose monthly payment increases
20 percent or more must provide income and employment documentation
and have an acceptable credit score and debt-to-income ratio to
demonstrate they can afford the new higher payment. (This scenario
typically applies only to borrowers who want to refinance an ARM,
interest-only or payment-option type of mortgage, which has a
very low interest rate.)
- More information may be found on Freddie
Mac's Web site.
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