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FannieMae RefiNow Program: A Refinancing Option for Seniors

An alternative way to refinance your home

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Mortgage Refinance Loan Application Form along with numbers on the side seen through a magnifying glass

While interest rates are on the rise, programs are still available to help people lower their monthly mortgage payments and interest rates. Lower-income homeowners, including seniors who didn’t refinance their mortgages when rates were low, might still access savings through Fannie Mae’s RefiNow program.

The RefiNow program, introduced in 2021 and expanded in 2022, provides lower-income homeowners with an accessible way to reduce their mortgage costs.


Key insights:

  • The RefiNow program was designed to provide lower-income homeowners a way to make their mortgage payments more affordable.
  • The program is available only to individuals who are refinancing an existing Fannie Mae-backed conventional loan.
  • Eligibility requirements were expanded in 2022 to make the program more accessible.

What Is the RefiNow program?

Fannie Mae introduced its RefiNow program in 2021 to provide expanded mortgage refinancing options to lower-income borrowers. A primary goal of the RefiNow program is to make mortgages more affordable by providing lower interest rates and monthly payments.

To accomplish the RefiNow program’s affordability goals, the refinanced loan must include an interest rate reduction of at least 50 basis points (0.5%). The borrower’s monthly principal, interest and mortgage insurance payment (as applicable) must also be reduced. When Fannie Mae launched the program in 2021, a monthly payment reduction of $50 was required, but this was changed in 2022 to allow any monthly mortgage payment reduction to qualify.

The RefiNow program is only available to individuals with an existing conventional Fannie Mae mortgage. If you have an existing mortgage, the odds are relatively good that it’s owned by Fannie Mae, which has a nearly $4.1 trillion book of business.

How can I qualify for the RefiNow program?

To qualify for the RefiNow program, your existing loan must be a conventional Fannie Mae loan secured by a single-family primary residence. You must have obtained your existing loan at least 12 months prior to applying, and your current income level can’t exceed 100% of your area’s median income. Fannie Mae doesn’t require you to meet a minimum credit score; you can have a debt-to-income (DTI) ratio of up to 65%, and your home only needs to have 3% equity (your loan-to-value can be up to 97%).

Although no minimum credit score is required, the lender will review your credit report and evaluate your credit history. Your credit report needs to show that any standard waiting periods for significant derogatory credit events have already passed (four to seven years for bankruptcies, foreclosures, short sales, etc.). Plus, you can’t have any 30-day payment delinquencies during the past six months or more than one within 12 months.

How much can I save with the RefiNow program?

When you refinance with the Fannie Mae RefiNow program, it’s guaranteed that your rate will be reduced by at least 0.50%. However, the mortgage refinance savings you’ll receive depends on the size of your mortgage, how much of a rate decrease you receive and the terms of your mortgage.

Assuming the minimum 0.50% rate reduction, the initial annual interest savings on a $150,000 to $300,000 30-year mortgage would range from $750 to $1,500.

How do I apply for the RefiNow program?

The steps you’ll need to take to apply for the RefiNow program include:

If you can’t remember whether your original mortgage is owned by Fannie Mae, you ask your loan servicer.
Besides the requirement of an existing Fannie Mae conventional loan, you must have an income at or below the area median AMI. You can use Fannie Mae’s Area Median Income Lookup Tool to see what the AMI is for your area.
Applying for a mortgage always begins by searching for a mortgage refinance company. Since the RefiNow program aims to help you refinance an existing mortgage, a simple place to begin is with your current lender. You can also research mortgage refinance companies online or find a lender by visiting your local bank or credit union.

You’ll need to provide basic personal information and documentation about your income when you apply for the loan (e.g., tax returns, pay stubs). Make sure you have that on hand before you get started.

Once you’ve gathered the preliminary information you’ll need, apply online, if possible, with your chosen mortgage lender. Carefully complete the application and provide all requested information, as this will help expedite the approval process.
Sometimes lenders need additional information after you’ve applied to understand your financial situation or verify your income. Provide this information to your lender as quickly as possible to help it complete the underwriting and approval process.
You’ll often receive conditional approval after the lender has finished evaluating your credit and income, pending verification of your home’s value via an appraisal. Unless your lender deems your loan eligible for an appraisal waiver (most loans aren’t eligible), you’ll need to pay for the appraisal. You’ll later receive a $500 credit for the appraisal from your lender.
After your lender has received and reviewed your appraisal to ensure you have at least 3% equity in your home, your loan should be approved, and you’ll be ready for closing.

Giovanni Acosta, a mortgage loan originator and branch manager for Equity Now, a direct lender, says most conventional mortgages are owned by Fannie Mae or Freddie Mac and that borrowers assume the loan servicer is the only refinancing option. Acosta advises borrowers to “explore options like RefiNow or other programs that have been specifically designed to eliminate eligibility hurdles, support sustainable homeownership and provide cost relief.”

FAQ

What credit score do I need to qualify for the RefiNow program?

In 2022, eligibility under the RefiNow program was expanded to remove a minimum credit score requirement of 620. There’s no longer a minimum credit score requirement, although you must have some credit score. Also, standard waiting periods for significant derogatory credit events must have expired.

How long does it take to get approved for the RefiNow program?

The amount of time it takes to get approved largely depends on how quickly you provide any requested information to your lender, the complexity of your financial situation and how long it takes for your lender to get an appraisal. Most mortgage lenders take about three to six weeks to complete the approval process; you can expect the same timeline will likely apply to the RefiNow program.

What happens if I’m not eligible for an appraisal waiver under the RefiNow program?

If you’re not eligible for an appraisal waiver under the RefiNow program, you’ll receive a $500 credit for the appraisal from your lender. No matter how much your actual appraisal costs, your lender is required to pass on the entire $500 credit to you. Fannie Mae’s goal in providing this credit is to help you address upfront costs associated with refinancing your mortgage.

Bottom line

Fannie Mae’s RefiNow program is a viable and readily accessible option for lower-income borrowers — including seniors — who meet program requirements. If you qualify, you’ll receive an interest rate reduction, and your monthly payment will decrease. Start by making sure your loan is owned by Fannie Mae and you meet other basic requirements; then, you can begin researching lenders as you prepare to apply.

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. To learn more about the content on our site, visit our FAQ page. Specific sources for this article include:
  1. Fannie Mae, "Lender Letter LL-2021-10 — Expanding Refinance Eligibility with RefiNow." Accessed Nov. 23, 2022.
  2. Fannie Mae, "Monthly Summary." Accessed Nov. 23, 2022.
  3. Fannie Mae, “Appraisal Waivers.” Accessed Nov. 23, 2022.
  4. Fannie Mae, "RefiNow: Expanding refinance eligibility for qualifying homeowners." Accessed Nov. 23, 2022.
  5. Fannie Mae, "RefiNow FAQs." Accessed Nov. 23, 2022.
  6. Fannie Mae, “B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit (08/07/2019).” Accessed Nov. 23, 2022.
  7. U. S. Department of Housing and Urban Development, “Common Questions from First-time Homebuyers.” Accessed Nov. 23, 2022.
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