The RefiNow program was designed to provide lower-income homeowners a way to make their mortgage payments more affordable.
Jump to insightThe program is available only to individuals who are refinancing an existing Fannie Mae-backed conventional loan.
Jump to insightWhat 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.
Do 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 has to be at or below 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.
» LEARN MORE: How to lower your monthly mortgage payment
How do I apply for the RefiNow program?
The steps you’ll need to take to apply for the RefiNow program include:
1. Check to ensure your existing mortgage is backed by Fannie Mae.
2. Confirm your current income is at or below your area’s median income (AMI).
3. Research mortgage refinance companies.
4. Gather your personal information and income documentation.
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.
5. Apply for a mortgage online.
6. Submit any additional information requested by your lender.
7. Pay for an appraisal.
8. Get approved and funded.
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?
There’s no longer a minimum credit score requirement to qualify for the RefiNow program, 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.
Sources
- Fannie Mae, " Lender Letter LL-2021-10 — Expanding Refinance Eligibility with RefiNow ." Accessed Nov. 23, 2022.
- Fannie Mae, " Monthly Summary ." Accessed Nov. 23, 2022.
- Fannie Mae, “ Appraisal Waivers .” Accessed Nov. 23, 2022.
- Fannie Mae, " RefiNow: Expanding refinance eligibility for qualifying homeowners ." Accessed Nov. 23, 2022.
- Fannie Mae, " RefiNow FAQs ." Accessed Nov. 23, 2022.
- Fannie Mae, “ B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit (08/07/2019) .” Accessed Nov. 23, 2022.
- U. S. Department of Housing and Urban Development, “ Common Questions from First-time Homebuyers .” Accessed Nov. 23, 2022.
