How low-income homeowners can save $ 3,000 a year by refinancing their mortgage

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REFINANCING can be a great way to reduce mortgage payments – and there’s a program to help you save thousands of dollars a year.

First announced by federally backed mortgage companies Fannie Mae and Freddie Mac in April, it is available to low-income borrowers.

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This Refinance Program Could Save You Up To $ 250 Per MonthCredit: Getty

The Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, estimates that borrowers who pursue this refinancing option can save between $ 100 and $ 250 per month on average.

“This new refinancing option is designed to help eligible borrowers who have not yet refinanced to save between $ 1,200 and $ 3,000 per year on their mortgage payment,” said Mark Calabria, director of the FHFA at the time. .

To qualify, you need a few things. This includes a mortgage backed by the federal government, while earning no more than 80% of the median income in your area.

Also, the mortgage to value ratio should not exceed 97%, you need a credit score above 620, and the debt to income ratio should be above 65%.

In addition, you must not have missed a payment in the past six months and failed to make more than one payment in the past year.

If you qualify, your lender would previously have to waive an upfront refinancing fee of 50 basis points if your loan balances were $ 300,000 or less.

These refinancing fees were then completely eliminated last month.

A lender is also required to reduce monthly mortgage payments by at least $ 50 if you qualify.

What if you don’t qualify?

Mortgage rates remain low and you may want to consider other refinancing options if you do not qualify for the government option.

Last week, Freddie Mac reported that rates on 30-year fixed mortgage rates slipped to 2.86% from 2.88%.

But make sure you know all the fees, including closing costs, which can be anywhere from 2% to 5% of the total cost of your loan.

“Some people are tempted to refinance when rates are low, but there may be tax implications or hidden costs associated with refinancing,” Jenna Lofton, certified financial advisor and founder of Stock, told The Sun earlier this month. Hitter.

She added: “So make sure you know what you’re getting into before signing on the dotted line.”

Fed to provide interest rate outlook soon

During this time, interest rates may not be low forever.

In fact, it can be an important week for those paying close attention to potential interest rate hikes.

On Wednesday, the Federal Reserve is expected to provide a forecast of how often it will need to hike rates in the next few years, according to Reuters.

The Fed could then start to hike rates at the end of 2022.

Additionally, we show you five ways to improve your credit score if it is below 700 points.

We also spoke to Andy Hill, who paid off his mortgage of $ 195,000 with his partner in less than four years.

I built a tiny house during foreclosure to save £ 60,000 – now I have financial freedom at 26

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