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Is The RefiNow Government Refinance Program Right for You?

Here’s Everything You Need to Know

Did you want to refinance your home in 2020, but were denied or the scary thought of it made you say “this isn't the right time”? 

Maybe:
You have so much debt that eating fast food is a luxury
Your credit score is so low that you don’t even want to look at it
You’re afraid of high upfront costs (like appraisals and fees) that make refinancing seem out of reach. Spoiler: it’s not.

With RefiNow, people with low credit scores, high debt to income ratios, and even those who have missed a mortgage payment in the past can all qualify to refinance their home and save money every month doing so.

How much can I save if I refinance with RefiNow?

FHFA (The Federal Housing Finance Agency) expects the average borrower to save $100 to $250 a month by refinancing while rates remain extremely low. What’s that mean for you? Savings of up to $3,000. What would you do for your family with the extra savings?

As a designated partner, we at Lower can help you figure out just how much you’d be able to save each month with this new expanded government mortgage relief program.

What is RefiNow?

RefiNow, launched by Fannie Mae in June 2021, is an affordable refinancing option. It’s aimed at finally making refinancing possible for lower-income homeowners that may not have qualified before (due to low credit scores, missed payments, or high debt) and missed out on historically low interest rates.

RefiNow can reduce your annual housing costs by up to $3000 a year, even if you have weak credit or imperfect payment history.

According to a statement from Fannie Mae:

“Many homeowners in lower income brackets may believe they can’t afford to refinance, be convinced they won’t qualify, or be unaware of the potential monthly savings,”


Fannie Mae and Lower are aiming to help an estimated 2 million homeowners lower the interest rate they pay on their mortgage each month making home ownership more affordable for more Americans like you.

This means you’ll be closer to being financially independent! 

What are the main benefits of RefiNow?

  • Lower your annual mortgage payments by up to $3000
  • Refinance with no up-front Appraisal Costs or Fees
  • Get approved with weaker credit or imperfect payment history

Who exactly is RefiNow for?

In 2020, the average U.S. consumer debt reached a new record. And with the crisis of Covid-19 turning into very real financial crises for so many Americans, it’s no surprise that credit card debt went up, and credit scores went down. That being the case, many who wanted to refinance their home in 2020 weren’t able to.

RefiNow is designed specifically to benefit lower-income homeowners who refinance at a much lower pace than higher-income families.

One of the main stipulations to qualify is that your income must be at or below 80 percent of the area median income. That means the income level is based on your city or neighborhood, not the entire state or nation.

This also applies to your current income, not the income you reported when you first took out your mortgage. That’s why RefiNow is especially great news for those who were hit with financial hardships due to COVID-19.

Back up, what is refinancing?

Refinancing is when you take out a new loan in order to pay off your current loan. When you close on the new loan, the old one will be paid off with the money, or a portion of that money, from the new loan and the account will be closed. 

From that point on, everything continues under the terms of the new loan. It no longer matters how many years were left on your previous loan, what the interest rate was, or what your payments were. 

In order to understand both the benefits and drawbacks to refinancing, it's important to understand that the new loan completely replaces the old one. 

Ok, so what’s mortgage relief?

Refinancing a mortgage is often a simple way to make home ownership more affordable. But, the borrowers who could benefit the most sometimes struggle to take advantage of the lower monthly home payments and overall savings if they have lower credit scores, don’t have the upfront cash needed for fees or an appraisal, or have missed a payment in the past.

For these homeowners, mortgage relief programs can make refinancing within reach. Once borrowers qualify for a refinancing program, their monthly payments become more affordable, preventing mortgage delinquencies and the worst-case scenario of foreclosures. 

What’s the difference between RefiNow and traditional refinancing?

“Lower-income borrowers typically refinance at a slower pace than higher-income borrowers, potentially missing an opportunity to save on housing costs. Fannie Mae’s new RefiNow option will help more homeowners refinance by removing some of those barriers, improving affordability, and promoting sustainable homeownership,” — Malloy Evans, Senior Vice President and Single-Family Chief Credit Risk Officer, Fannie Mae.

In more typical refinancing scenarios, homeowners will have had a history of higher, steady income giving them the chance to gain equity in their home and improve their credit over time by gradually lowering their loan balance and keeping credit card balances generally low resulting in higher credit scores and lower debt-to-income ratios.. 

These families generally have little trouble jumping on the opportunity to refinance when market rates drop, ultimately making it easier for them to save money each month on their mortgage payments. 

In contrast, lower-income families who could benefit the most from refinancing have a harder time jumping over the hurdles to qualify. That's why RefiNow is a great option for those who may have wanted to refinance but previously couldn't.

How is RefiNow different from typical mortgage relief programs?

RefiNow makes it easier for anyone who was previously unable to refinance because of bad credit, lots of debt, or less than perfect payment histories to finally do so. If you were rejected from refinancing programs in the past, RefiNow could be just what you’ve been waiting for.

If you think you don’t qualify, you probably do.

How is RefiNow different from other government refinancing programs?

Some borrowers who are eligible for the RefiNow program might also discover that they qualify for Fannie Mae's HomeReady program. However, RefiNow is often better for borrowers who have higher DTIs (debt to income ratios) and limited funds available to cover up-front expenses. 

In plain English, RefiNow is “I have too much debt to even bother applying!” friendly.

How does refinancing with RefiNow save me money?

If you'd like to save money on your mortgage, you may be wondering exactly how refinancing allows you to do that. There are actually a few ways refinancing can help you save money:

  • Longer loan term — Chances are, you've had the loan you're looking to replace for a few years now. Let's say you took out a 30-year mortgage and have been paying on it for 7 years. You can now refinance with another 30-year mortgage. This would essentially be extending your loan by another 7 years. So although you'll make payments for an additional 7 years, the money owed will be spread over that time as well, lowering your monthly payment. 
  • Lower interest rate — Mortgage interest rates fluctuate with the state of the market. “Mortgage rates already were low when COVID-19 began to spread in the U.S. The spring [of 2020]’s sharp declines in employment and spending pushed rates even lower. “Bad economic news is often good news for mortgage rates,”’ says Greg McBride, Bankrate’s chief financial analyst. This means that when rates go down, it’s an ideal time to refinance your mortgage and lock in a better rate, reducing the amount of your monthly payments. 

How does RefiNow by Lower make it easier for me to refinance?

Reduce or eliminate high up-front costs: 

As a lender, we’re required to lower your monthly payment by at least $50 and reduce the interest rate by .5 percent in order to qualify you. And, if you’re ineligible for an appraisal waiver, we’ll provide a credit of up to $500 for your appraisal.

It’s easier than ever to qualify: 

You can have a debt-to-income (DTI) ratio of 65 percent and still qualify for RefiNow. 

For example, typical mortgages require a DTI of no more than 43 percent, and Fannie Mae programs normally require a DTI of no more than 50 percent. 

Borrowers may also qualify with a credit score of 620, well below the typical good-credit threshold of 700.

How do I know if I qualify for RefiNow?

You could be the perfect candidate if you...

  • Have a Fannie Mae-backed mortgage — Unfortunately, not all mortgages will qualify for the RefiNow refinance program. The first obstacle is that your mortgage must be backed by Fannie Mae. For those who don't know, Fannie Mae is the semi-official name of the Federal National Mortgage Association. It was created by congress in the 1930s to make purchasing a home easier. To see if your loan is covered by Fannie Mae, you can check their loan lookup tool.
  • A qualifying credit score — Like any financing option, there are requirements for your personal finances as well. To qualify for RefiNow, you'll need a credit score of at least 620, a generous reduction from the typically required score of 700. Psst. the Lower.com App has free credit monitoring so you can track your credit score while working towards your goals. With no impact to your credit.
  • Debt-to-Income Ratio — You'll need a debt-to-income ratio of 65% or less. 
  • Payment History — You’ll need to apply at least 12 months (but no more than 10 years) after your last refinance. You can’t have any missed mortgage payments in the last 6 months, and no more than one missed payment in the last 12 months.
  • Income limits — Your income can't be more than 80% of your area's median income. For instance, if the average income in your area is $85k a year, you need to make $68k or less.
  • Additional mortgage requirements — There are a number of other requirements that your loan must meet in order to be eligible for RefiNow. 
  • First, the loan must be between one and ten years old. 
  • Second, it must be a single-family home, no multi-unit housing is allowed.
  • Finally, you must have at last 3% equity remaining in the home; this means having a loan-to-value ratio no higher than 97%

Are there any other RefiNow guidelines I should keep in mind?

RefiNow is not a HELOC (home equity line of credit) or a home equity loan. The RefiNow Program only permits rate and term refinances which means that the only terms of your mortgage that can change are your program, rate and loan length. 

The new loan must also be a limited cash-out refinance that has prepaid items, financed closing costs, and points at or below $5,000, along with cash out that's less than or equal to $250. Homeowners can apply any excess proceeds as curtailments on new loans. 

When applying for a new RefiNow loan, it needs to be a fixed-rate loan with maximum LTV (loan to value), CLTV (combined loan-to-value), and HCLTV (high credit loan to value) ratios that Fannie Mae's Eligibility Matrix permits. 

Borrowers also have to be the same people on the new loan as they were on the existing loan. In other words, you can’t add or remove new borrowers. On the other hand, it may be possible to remove borrowers if either:

  • The remaining borrower or borrowers meet all payment history requirements and can prove that they have made the minimum 12 months of payments using their own funds, or
  • A borrower dies and the loan file contains documented evidence of the borrower's death.

How do I apply for RefiNow?

If you've struggled in the past with a low credit score and have difficulty finding a lender for refinancing, consider Lower. Our RefiNow option allows working families to save on their home payment even if they've struggled with credit problems in the past. 

With RefiNow, just because you have a lower credit score, it doesn't mean you're stuck with higher payments. Lower won't even do a hard credit check until you qualify, and finding out if you do is easy — just answer these 3 questions:

  • Have you paid your current loan on time for the past 6 months? Were you only late once in the past year?
  • Is your credit score at least 620? Don't worry if you don't know what it is — we'll show you once you apply.
  • Do you currently live in a single-family home that you use as your primary residence?

Answering yes to these questions has you on your way to lower monthly payments and more financial freedom. The only question left to answer is, what will you do with the extra cash you're saving every month? Apply to Lower’s RefiNow program and see how much you can start saving.

What should you do next?

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