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.