Home refinance interest rates dipped near historic lows in 2020, but not every homeowner took advantage of them or had the ability to do so — creating a missed opportunity for savings. And it’s something the Fannie Mae RefiNow program is attempting to change by making refinancing more accessible — and more appealing — for a wider range of homeowners. If you have a Fannie Mae-backed mortgage, you may qualify for the RefiNow program.
What is RefiNow?
The main goal of Fannie Mae’s RefiNow program is to expand mortgage refinancing opportunities for homeowners with a Fannie Mae mortgage.
In other words, RefiNow (available through Ally Home) makes it easier for qualifying borrowers to refinance at a lower interest rate.
How RefiNow Helps Homeowners
The RefiNow program delivers three key benefits to homeowners who may want to refinance their mortgage but haven’t yet because of their income:
- Your interest rate will be reduced by at least 0.50%. Plus, you’re guaranteed to earn a savings of at least $50 on your monthly mortgage payment.
- If an appraisal is required to qualify, Fannie Mae will issue a credit to your lender to cover the appraisal fee.
- A reduction in additional fees that could otherwise increase the total cost of your refinance.
All of this reflects the underlying purpose of the program, which is to make refinancing easier for homeowners who need assistance.
Who Qualifies for RefiNow?
Fannie Mae’s RefiNow program won’t help every homeowner. But it’s worth looking into if you have a Fannie Mae-backed mortgage.
To qualify for the program, you must:
- Have a Fannie Mae-backed home loan that’s secured by your principal residence (this must be a single-family home)
- Have a current income that’s at or below 80% of the area median income where you live, based on your household size
- Be current on your mortgage payments (i.e. no missed payments in the past six months and no more than one missed payment in the past 12 months)
- Have a mortgage with a loan-to-value ratio (LTV) of up to 97%
- Have a debt-to-income ratio of 65% or less and a FICO credit score of 620 or higher
If you’re looking to take advantage of this refinance option, first use this tool to determine whether you have a Fannie Mae-backed mortgage loan. Then, use Fannie Mae’s free area median income lookup tool to see if you’re income-eligible. If you meet both requirements, then talk to your current lender about how to apply for RefiNow.
You can use Ally Home’s Refinance Calculator to see how much of a difference a new loan could make.
Before applying for a refinance loan through the RefiNow program, you should take note of several important aspects of it. First, you can use the loan to pay for closing costs, prepaid expenses, and mortgage points, up to $5,000. That’s a plus, since it means you don’t have to pay for those costs out of pocket.
Second, your mortgage refinance loan must be $300,000 or less. If you have a higher balance loan, including a jumbo loan, you won’t qualify for the RefiNow program. In that case, you may have to seek out other refinancing options.
RefiNow Could Save You Money
Homeownership is a journey — and it doesn’t end when you close on the property. Your original mortgage might’ve been the best option at the time, but now Fannie Mae’s new mortgage refinancing program, RefiNow, could offer you a better home loan option by giving you the ability to refinance your mortgage when you previously couldn’t. Talk about the road better traveled.
And if you don’t happen to qualify for Fannie Mae’s RefiNow program, don’t worry. Either way, Ally Home is here to help you figure out the best solution for your specific refinancing journey.
Learn about your mortgage refinance options.