Refi Possible℠: An Easy-to-Understand Guide

When interest rates are low, it’s natural to want to get in on the action! Is it too late to take advantage of lower interest rates if you already have a mortgage?

It’s never too late with Refi Possible℠! Freddie Mac’s Refi Possible℠ program helps low-to-middle-income borrowers reap the rewards of low interest rates, resulting in more favorable mortgage terms (hello, lower monthly payments!).

Many low-to-middle-income borrowers don’t consider refinancing. They assume that they wouldn’t qualify for any of the programs out there. This is a costly mistake! Refinancing is easier than you think, especially with MortgageDepot on your side. With the help of our experienced loan officers, you could be on your way to lower monthly mortgage payments in no time!

Refi Possible℠ Explained

Refi Possible℠ is a rate/term refinance program that allows qualified borrowers to have a high loan-to-value (LTV) ratio and a high debt-to-income (DTI) ratio. What does all of this mean? Here are three key definitions to help you understand:

  • Rate/term refinance: A rate/term refinance lets borrowers take advantage of more favorable interest rates or shorten their loan’s duration. In a rate/term refinance, the borrower doesn’t receive any cash (that happens in a cash-out refinance), but the goal is to save money in the long run with lower and/or fewer monthly mortgage payments.
  • LTV ratio: The LTV ratio is the loan amount divided by the appraised value of the home. It helps lenders assess their risk level in a mortgage.
  • DTI ratio: Your DTI ratio is the balance between your debt and income. When it comes to your DTI ratio, aim low. If your DTI isn’t as low as you would like, you might still qualify under the Refi Possible℠ program.

Refi Possible℠ Program Requirements

If better mortgage terms are on your mind, it’s time to see if you qualify for the Refi Possible℠ program. Here are the requirements and highlights that you need to know:

  • Primary single-family homes, log homes, manufactured homes and PUDS (planned unit developments) are eligible.
  • Condos are eligible only if they have a deed restriction for age.
  • The maximum DTI allowed is 65%.
  • Non-occupying co-borrowers are allowed if they are immediate family members. In this situation, the maximum LTV is 95%.
  • Borrowers need a minimum credit score of 620.
  • The borrower’s income cannot exceed 80% of the Area Median Income (AMI).
  • The interest rate on the new loan must be at least 50 basis points lower than the previous loan.
  • Secondary financing must resubordinate and cannot be included in the new loan. In this situation, the CLTV ratio can be up to 105%.
  • If the new loan is over 80% LTV, mortgage insurance (MI) is required.
  • There is no limit on the number of financed properties owned.

Contact MortgageDepot Today!

Refinancing is an easy way to save money in the long run. The Refi Possible℠ program makes refinancing accessible to more borrowers. If you have felt intimidated by the thought of refinancing in the past, contact us today! We’ll help you determine if the Refi Possible℠ program meets your needs and get you on the path to better mortgage terms.

Connect with one of our loan consultants to learn more.

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