Fannie Mae is tackling the Home Affordable refinancing program with RefiPlus and DU RefiPlus. One of these could be your ticket to a quick and affordable mortgage refinance-but only if you qualify.
President Obama ushered in his Home Affordable mortgage refinance concept earlier this year to help homeowners take advantage of historically low mortgage rates. The concept, as designed by the administration, then had to be implemented by the two mortgage government-sponsored enterprises (GSE), Fannie Mae and Freddie Mac. Fannie's implementation of Home Affordable involves two streamlined processes known as RefiPlus and DU RefiPlus.
Fannie Mae Mortgage RefiPlus, DU RefiPlus
The difference between RefiPlus and DU RefiPlus is relevant only to mortgage industry insiders. The Refi Plus program involves manual underwriting of same-servicer mortgages, while DU Refi Plus involves the use of an automated underwriting system called Desktop Underwriter.
What's important to homeowners, though, is that Fannie Mae's Home Affordable programs are designed to get the mortgage refinance done fast. The details relevant to interested homeowners include the following:
- There's no "seasoning" required on the existing mortgage loan. Seasoning refers to the length of time the homeowner has been servicing the loan.
- There's no minimum credit score required, although the homeowner must provide a credit score for pricing purposes.
- When the borrower doesn't have mortgage insurance on the existing mortgage, then none will be required on the new mortgage refinance. If the borrower currently has mortgage insurance, the same insurance level will be required on the new mortgage refinance.
- The mortgage refinance amount can be as high as 105 percent of the home's value. Translating this into mortgage lingo, the maximum loan-to-value is 105 percent.
- The existing mortgage must be a Fannie Mae loan. Homeowners who don't know if Fannie Mae has a hand in their mortgage should access the loan look-up tool at FannieMae.com.
FHA mortgage refinance, a second option
Homeowners who don't currently have a Fannie Mae loan might qualify for a refinance through the FHA. The end result will be largely the same-the mortgage will be refinanced-but the FHA offering has some details that differ from Fannie Mae's Home Affordable concept:
- The FHA mortgage refinance amount is capped at 97.5 percent of the home's value. Or, in mortgage lingo, the maximum loan-to-value is 97.5 percent. This automatically excludes homeowners who are underwater on the mortgage.
- FHA mortgages require the borrower to pay upfront and ongoing FHA mortgage insurance premiums.
- The FHA Streamline program is only available to existing FHA borrowers; non-FHA borrowers can still get an FHA refinance, but not under the streamlined program.
The gist of it is this: If you need a mortgage refinance, there are options. Start working the process now to get your deal in place while mortgage rates remain low.