In August 2020, Fannie Mae and Freddie Mac added a .50 percent adverse mortgage fee to all new refinance loans. The purpose was to counteract its heavy losses related to the COVID-19 pandemic’s shutdowns and other issues. The impact of this fee was either higher closing costs or a higher interest rate. The Fannie Mae and Freddie Mac loans are popular with low-income borrowers, so the fee has not been popular. Recently, Fannie Mae and Freddie Mac have removed this fee and have added a $500 appraisal credit for new refinance loan requests. Altogether, the savings available to borrowers is estimated to be up to $225 per month. However, only select homeowners will qualify.
The qualifications for the fee removal and the appraisal credit are extensive, and all of the factors must be met. Some of these requirements are a minimum credit score of 620 and personal income at 80 percent of the local area’s median income level. In addition, the current loan that is being refinanced must be a Fannie Mae or Freddie Mac home loan that is less than 10 years old and greater than 12 months old. The maximum LTV for the new loan is 80 percent, and the loan amount must be lower than $300,000. You can get more details about these and other program requirements by speaking with a loan representative at MortgageDepot.
Keep in mind that there may be other ways to reduce your monthly mortgage payment amount. Even if you do not qualify for this Fannie Mae and Freddie Mac incentive, you may qualify for a refinance loan through other programs. Our lending team is eager to learn more about your situation, and we will happily help you to uncover savings opportunities through various loan programs.
Contact one of our loan consultants to explore your options.