FHFA announces new refinance option for low-income borrowers

The FHFA announced this week that Fannie Mae and Freddie Mac will implement a new refinance option for low-income borrowers. Eligible borrowers will benefit from a reduced interest rate and lower monthly payment, with the FHFA estimating that borrowers who take advantage of the new refinance option could save an average of between $100 and $250 per month. 

The new refinance option includes:

  • a requirement that the lender provides a savings of at least $50 in the borrower’s monthly mortgage payment, and at least a 50-basis point reduction in the borrower’s interest rate;
  • a maximum $500 credit from the lender for an appraisal if the borrower is not eligible for an appraisal waiver; and
  • a waiver of the 50 basis point up-front adverse market refinance fee for borrowers with loan balances at or below $300,000.

More information about the new refinance option for low-income borrowers is available on an FHFA fact sheet.

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