Streamline Refinancing For Fha Va And Usda Loans
Popular mortgage relief programs since 2009 have only been available to homeowners with conventional mortgages backed by Fannie Mae or Freddie Mac.
But what if your loan is government-backed?
Homeowners with federally-backed FHA, VA, and USDA mortgages have access to different mortgage programs than those with conventional loans.
Namely, they can use a Streamline Refinance.
The Streamline Refinance is a special mortgage refi program for people with government-backed loans.
Its similar to a mortgage relief refinance, because you can use a Streamline Refi even if your home is underwater or has very little equity.
And a Streamline Refinance has other benefits, too.
- Theres less paperwork because you dont have to re-verify your income or employment or get the home appraised
- Government-backed loans typically have below-market mortgage interest rates
- Closing costs are typically cheaper
Homeowners can qualify for an FHA Streamline if theyve made at least three consecutive on-time payments on their existing FHA loan.
Even if you make your three consecutive payments while in forbearance, you may qualify for FHA Streamline refinancing. The Department of Housing and Urban Development , which oversees the Federal Housing Administration, is one of the more lenient housing agencies.
For a VA Streamline Refinance , the rules are more lenient.
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Volunteer Income Tax Assistance Program
Through the Volunteer Income Tax Assistance program , you can get free tax preparation. IRS offers this service as part of its compliance and outreach efforts. Tax preparation is free if you have a low income and do not exceed $54,000 in one year. VITA is free and open to everyone, but it is especially available to low-income individuals, to people with disabilities, and to people who speak English as a second language.
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Refinancing May Be Your Friend
Another possible remedy for overwhelming housing expenses is to refinance your mortgage, if you haven’t already done that.
Mortgage rates recently fell below 3% for the first time in months. The mortgage technology and data provider Black Knight said last week that over 13 million homeowners were still in a good position to refinance and cut their mortgage payments .
The company says the best refi candidates hold 30-year mortgages, have at least 20% equity in their homes, and are current on their payments. They also should have a credit score of 720 or better and be able to shave at least three-quarters of a point off their mortgage rate by refinancing.
But you’d need to determine whether you’re likely to stay in the home long enough for the savings to more than pay off the new loan’s closing costs, which typically run anywhere from 2% to 5% of your loan amount.
If that math doesnt work, forbearance and Homeowners Assistance Fund money may provide the relief you need.
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Getting The Money May Take Time
The money will be funneled to borrowers through state housing agencies.
At least 60% of the state grants must go to homeowners with incomes that don’t exceed either the local median income or the national median income, whichever is higher.
Russell Graves, executive director of the National Foundation for Debt Management, a multistate housing counseling agency, says he doesnt expect the funds to be made available until early 2022.
“There are so many other things going through these agencies: rental assistance, different kinds of pandemic assistance,” Graves says. “Frankly, we have never put so much money toward housing in history. The numbers are staggering.”
Fmerr: The Enhanced Relief Refinance Program
Editors note: Freddie Mac has temporarily paused the FMERR program due to a low number of applicants. With home equity increasing nationwide, many owners are eligible to refinance without needing a special program like FMERR. Contact a lender to check your equity levels and find out whether you qualify for a refinance.
For borrowers with a mortgage through Freddie Mac, Freddie Macs Enhanced Relief Refinance program was created to help homeowners with limited equity take advantage of historically low interest rates and reduce their monthly payments.
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Allocations For States And Territories
The statute requires the Department of the Treasury to make allocations for each state, the District of Columbia, and Puerto Rico based on homeowner need, determined by reference to the average number of unemployed individuals and the number of mortgagors with mortgage payments that are more than 30 days past due or mortgages in foreclosure. The statute establishes a minimum allocation of $50 million for each state, the District of Columbia, and Puerto Rico.
For Guam, American Samoa, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands, there is a $30 million territorial set-aside, to be allocated based on each territorys share of the combined population of all four of these territories.
Take Advantage Of Historically Low Interest Rates With Refinance Relief Programs
These new programs are important because mortgage rates have plunged in the last 18 months. The 30-year-fixed mortgage rate hit its lowest level ever in early January 2021, bottoming out at 2.65%.
Even as of October 2021, 30-year fixed-rate mortgage rates hovered just below or slightly above 3%.
Todays Mortgage Interest Rates: December 16, 2021
| Weekly Rate Trends |
| 2.48% |
Copyright 2021 Freddie Mac. Averages are based on conforming mortgages with 20% down.
Homeowners with home values that were too low relative to their mortgage balances were barred from taking advantage of these historically low interest rates and from the substantial monthly savings that came with them.
Thats where HIRO and FMERR come in. Both programs allowed homeowners to refinance their Fannie or Freddie mortgages, even if their homes were underwater, or higher than their homes market value. Though these relief programs are currently paused, many homeowners are finding they can still refinance to a lower payment thanks to rising equity and low interest rates.
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Make An Informed Decision When Selecting Your Stimulus Program
Choosing the right mortgage stimulus program for the middle class requires you to know the type of aid and relief offered by your lender and whether you qualify for it.
Mortgage interest rates have reduced since the beginning of 2021, and you can take advantage of this by refinancing your mortgage. This will not only maintain your credit score but even lead to better personal finances for you.
Many homeowners have still not taken advantage of the new stimulus package because they are unaware that they are eligible.
When you choose the right stimulus program, you can save on your monthly mortgage payments and even get some extra cash in your pocket to help you pay other bills.
Mortgage Options From Fannie Mae And Freddie Mac
Homeowners with conforming loans backed by Fannie Mae or Freddie Mac have options for mortgage relief.
If youre experiencing a temporary hardship, its not too late to ask about forbearance. Theres currently no deadline to make an initial forbearance request with your loan servicer.
In addition, Fannie and Freddie recently came out with new refi programs that make it easier and cheaper to lower your interest rate and mortgage payment.
Fannie Maes RefiNow and Freddie Macs Refi Possible are designed for low- to moderate-income homeowners. You might qualify if you make average or below-average income for your area.
These refinance programs have unique benefits that can offer financial relief to homeowners, including:
- Lower mortgage rate and monthly payment
- Reduced closing costs with no appraisal fee
- Easier debt-to-income qualification
These new loan options can offer big savings for homeowners who might not otherwise qualify to refinance.
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How To Refinance Second Mortgages Heres What You Need To Know
Many homeowners refinance their mortgage at least once during the lifespan of their loan. If you already have a second mortgage, you may not have considered the possibility of refinancing your second mortgage. Refinancing second mortgages may prove to be beneficial for homeowners who are looking for lower interest rates and monthly payments.
Refinancing a second mortgage is generally similar to refinancing the first mortgage, but there may be different reasons to refinance again.
If you want to learn about refinancing your second mortgage, then read on. Youll need to take some steps in order to refinance.
Fmerr: The Freddie Mac Enhanced Relief Refinance
Editors Note: Freddie Mac has paused its FMERR program effective August 31, 2021. The agency cited extremely low volume as a reason for pausing the program. We recommend that you check with a lender to learn whether youre refinance eligible. You may have more home equity than you realize thanks to rapidly rising home values across most of the nation.
FMERR which stands for the Freddie Mac Enhanced Relief Refinance is Freddies version of a high-LTV program.
You can check Freddies loan lookup tool to see whether the agency owns your loan.
Requirements to qualify for an Enhanced Relief Refinance include:
- Your loan-to-value ratio is at 97.01 percent or higher for a single-family, primary residence
- Your loan was originated on or after November 1, 2018
- Youve had the loan for at least 15 months
- You have no late mortgage payments in the last 6 months, and no more than 1 in the last year
The FMERR program can be used for existing fixed-rate mortgages and adjustable-rate mortgages.
And, FMERR is not limited to single-family homes or primary residences. Homeowners with 2-,3-, and 4-unit homes, as well as second homes and investment properties, can qualify as long as they meet other eligibility requirements.
A mortgage lender can tell you whether you qualify for this refinance option. You do not have to refinance with your current lender.
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What If You Have A Non
Federal regulators believe most non-government-backed lenders and loan servicers will adopt policies similar to those mandated by the CARES Act and subsequent legislation. To find out, contact your loan servicer, ask what programs it has in place to provide mortgage relief to homeowners impacted by the coronavirus outbreak, and follow any instructions you are given.
Although the CARES Act does not require private lenders to offer mortgage assistance, if you and your lender come to any type of loan modification agreement, then the law regarding not reporting reduced or paused payments to does apply to you.
If your mortgage forbearance is set to expire soon, then you may be able to request an extensionbut you must apply before forbearance ends.
Mortgage Refinance Relief Faq
Does Congress have a mortgage stimulus program?
Although theres no current mortgage stimulus from Congress, there is federal help available for homeowners. In March 2021, the American Rescue Plan designated $10 billion to help struggling homeowners. The funds are distributed by individual states and you can locate your states agency and contact information with this lookup tool.
What is the Congress mortgage stimulus program?
Although theres no current mortgage stimulus from Congress, there is federal help available for homeowners. Its called the Homeowner Assistance Fund. This money is intended to help with a variety of homeownership costs, in addition to monthly mortgage payments, including property taxes, homeowners insurance, utility bills and HOA dues.
Is HARP still available?
No. HARP was discontinued on the last day of 2018. HIRO and FMERR were launched in 2021 and serve a similar function.
Are mortgage relief programs real?
Yes, these mortgage relief programs are real and available to help homeowners experiencing financial hardship. Be sure to apply for mortgage assistance directly through your states housing finance agency.
Who is eligible for mortgage relief programs?
You may be eligible for one of several mortgage relief programs, depending on the type of mortgage you have, even if your home value is low compared to your mortgage balance.
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Can The Government Help Me With My Mortgage
Government support if you cannot pay your mortgage. If youre having trouble paying your mortgage, several government programs can help. These include the mortgage rescue program, mortgage interest coverage, and other government benefits that can increase your income. Please contact your lender first.
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What Is A Mortgage Relief Refinance
When most people think of government or Congress mortgage relief, theyre thinking of HARP the Home Affordable Refinance Program.
HARP was a government program rolled out by the Federal Housing Finance Agency in 2009. For nine years, it helped millions of homeowners refinance after being hard-hit by the housing crisis.
The HARP program ended in 2018.
But many homeowners were still underwater on their mortgages especially in areas where home values have fallen instead of rising in recent years.
So Fannie Mae and Freddie Mac created similar relief programs, called HIRO and FMERR, to help homeowners refinance with little or no home equity.
The federal government also offers mortgage relief via the FHA, VA, and USDA Streamline Refinance programs. These low-doc refinance loans dont require a home appraisal, so homeowners can refinance even if they have very little home equity or if their home values have fallen.
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How To Get An Fha Cash
Do your research before you begin to consider an FHA cash-out refinance to make sure that you qualify and have everything required to apply.
Applying for an FHA cash-out refinance is similar to buying a home. There are similar considerations when it comes to credit, debt, and income, as well as an importance in budgeting and saving for the appraisal and closing costs in advance. This should be your first step in considering how much time you will need to prepare for an FHA cash-out refinance.
Take the time to bring up your credit score and save money for closing costs, if necessary. If you have a missed or late mortgage payment in the previous 12 months, you must wait until you have made 12 consecutive months of on-time payments to apply. Although FHA cash-out refinance loans are ideal for those with low credit, it is still a good idea to have a credit score of at least 600 before applying. Request copies of your credit reports if you suspect that your credit is not high enough.
Once youve decided that you would qualify for an FHA cash-out refinance, contact an expert before approaching your lender. Be sure to have your paperwork ready, including your current mortgage, documents outlining your other loans, as well as your income statements. Check with your lender to determine if you would require any additional documentation.
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Hiro Eligibility: Qualify For Mortgage Relief And A Lower Interest Rate
The HIRO qualifications are relatively simple, but they are important. You may be eligible for HIRO if:
- Your current mortgage loan is owned by Fannie Mae*
- Your loan must have been originated after October 1, 2017
- At least 15 months have passed from the note date of the existing loan to the note date of the new home loan
- You have made all your payments on time in the last 6 months
- Your mortgage balance is 97.1% or higher as a percentage of your homes market value, for a one-unit, owner-occupied dwelling
*You may not even know that your mortgage is owned by Fannie Mae. If youre unsure, use this lookup tool on the Fannie Mae website.
If you meet these conditions you are very likely to have access to lower rates but you need to act now before rates go up. Speak with your mortgage lender about relief options.
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