All About Fannie Mae Refi Plus And DU Refi Plus Programs

So, What Is The Fannie Mae Refi Plus Program All About?

So, in the early part of 2009, Fannie Mae, the largest holder of mortgage notes in the U.S.A announced a program where they would make refinancing easier and possible for homeowners whose mortgages are already backed by Fannie Mae.

The main benefits of the programs are many. You see, although mortgage rates are at historic lows right now, there are millions of homeowners who can not take advantage of the new money saving refi rates. The reasons are two-fold really.

Why Is The Program Necessary?

1) The values of many homes have fallen to a point where the amount owed on the home mortgage is more than the house is worth. Back in the good old days, Fannie Mae had the popular My Community programs which allowed the purchasing or refinancing of a home with a 100% loan to value ratio. Meaning, there was zero equity needed.

That popular program along with many others are long gone now. The most Fannie Mae will currently lend is up to 95% of a home’s value on a purchase. And to be honest, I am not really sure how much they will lend on a refinance today, as things are changing so rapidly.

2) Over the past year, Fannie Mae and Freddie Mac have gotten much tougher on credit score requirements. Where once you were able to secure one of these loans with a credit score lower than 580, that is no longer the case. For the most part, if your credit score falls below 620 you are out of luck.

3) As we all know, the lack of income documentation requirements (aka No Income Documentation Loans) are a big part of the reason we are in this mess to begin with. But, in the beginning, there was a good reason for no income loans. They were designed to help self employed individuals buy homes.

Because self employed people have so many deductions on there tax returns, their net income usually is not sufficient to qualify for a mortgage. However their actual income is. Therefore No income verification loans were developed to allow those individuals still buy homes they can actually afford.

How Can You Benefit From The DU Refi Plus Program?

With all these factors in mind, Fannie Mae announced a new program called Fannie Mae Refi Plus. Freddie Mac announced a similar program as well. The announcements of the new programs were made in February of this year.

The Refi plus program would go a long way in helping homeowners who are not able to take advantage of today’s low interest rates due to the reasons mentioned above. The new program would allow the following:

1) It would allow homeowners who owe more than their home is worth to still refinance their home up to a loan to value of 105%.

2) It would lower minimum credit score requirements to 580 and maybe even lower.

3) It would ease the income documentation requirements making it easier for the self employed to still qualify.

This applies to mortgages that are currently owned or backed by Fannie Mae or Freddie Mac. The mortgage has to be in good standing. This is not a loan modification program.

How Can You Apply For The Fannie Mae Refi Plus Program?

Although this program went into effect on April 4th of this year, I have not yet seen any lenders actually participating in it up to this point. I have heard that Wells Fargo is now allowing it although I have no proof of that.

So right now, I and many of my clients are waiting to see if this wonderful Fannie Mar Refi Plus program will actually come to fruition. If the history of many of the other borrower bail out programs is any indication, I would say “Don’t Hold Your Breath”

FHA Loan To Value Restrictions For Cash Out Refinancing

Maximum Loan To Value Drops For FHA Loans

WE knew it was coming for sometime and it finally arrived. As expected, the FHA has lowered the cash out refinance Loan to value from 95% down to 85% as of April 1st.

This change is not permanent as of yet. The Department of Housing and Urban Development wants some time to take a look at all the loans it currently has in its portfolio. But we do not anticipate that it will go back up any time soon.

As we understand it, if you currently have a second mortgage which combined makes your loan to value ratio greater than 85% that would be allowed of your keep 2nd mortgage in tact.

In order to receive cash out from your property there must be 12 months seasoning, meaning that you must have owned the house for at least a year.

No longer will the FHA allow non occupied co-borrowers to help the borrower qualify for the mortgage.

If your loan amount is greater than $417,000 or if you live in an area where home values are declining, you must have two appraisals done.

Any borrower who is delinquent will not qualify for a cash out mortgage.

Although these changes are hard to swallow for some it may be the best course of action right now to preserve the FHA as strong alternative to a tight lending market.

FHA loans are one of the best resources for home loan financing right now and they are needed to revive our slumping housing market and our slumping economy.

Should I Refinance?

Should You Refinance?

There is no doubt about it, the current state of the economy has many people asking this question.

Right now, interest rates are the lowest that they have ever been. Even during the refinance boom of the late 1990’s, no one ever dreamed that you would be able to get a 30 year fixed rate mortgage for around 4%.

But the reality is that right now you can get a fixed rate mortgage near 4%. And if history has taught us anything, it’s that a great deal like this one will probably disappear pretty quickly.

So Here is the answer to your question “Should I refinance?”

You should not consider refinancing if:

You plan on moving in the near future.

If your interest rate will only drop by 1/4% or less.

If you are uncomfortable with the new terms being offered.

Do not refinance your home to buy luxury items that you would otherwise not afford.

You Should Definitely Consider Refinancing If:

Your interest rate will be lowered by 3/8% Or More.

If you can lower your interest rate by 3/8% percent or more it is usually a no brainer. The savings that you will acquire from lower monthly payments will usually more than make up for any costs involved.

If you currently have an adjustable rate mortgage it would be very wise to lock in a low fixed rate right now.

You Should Refinance If you have a lot of credit card debt.

If you have sufficient equity in your home, you may be able to get some “cash out” which you can use to consolidate your bills. When this happens, you will be a double winner.

A quick formula to determine if refinancing is worth it

Take your total closing costs and divide them by how much money you will be saving every month. This will tell you how many months at the new payment it will take to pay off the closing costs. If you think you will be living in the home at least that long, then it may well be worth it.

We recommend getting several Interest rate offers from different banks.

When you do this, banks will fight over each other to do your mortgage and they tend to lower their interest rates and fees even more.

We highly recommend LendingTree Mortgage Loans

Lending Tree is Great Because you only have to fill out on simple form to get up to four great offers for your mortgage from the best banks in the country and their rates beat the national average.

Also By using Lending Tree, you will not have to deal with all those salesmen calling your house non-stop. Lending Tree filters all of this out for you. So you can make your decision comfortably without the pressure from pushy sales people.

By filling out the Lending Tree Form, you will get your answer as to weather you should refinance your home or not. It does not cost anything to find out so you should take advantage of this unprecedented opportunity of record low interest rates to find out.