The impact of the pandemic in the social and economic lives of people globally is making it increasingly difficult for people to afford their periodic mortgage payments. People who fall into this category can apply for one of the many mortgage relief programs to enable them to pay up their mortgage comfortably.
Whether it’s using a streamlined refinance, requesting loan forbearance, or refinancing to a lower interest rate and payments, there are many options. In this article, you’ll learn about Enhanced Relief Refinancing Government Program (FMERR).
Enhanced Relief Refinancing Government Programs in 2022
Before we begin, it’s vital to note that there was the Home Affordable Refinance Program (HARP), and many homeowners have benefited from this loan program. However, the expiration of HARP in 2018 resulted in the emergence of other refinance programs and some of the prominent ones are as follows.
Freddie Mac Enhanced Relief Refinance Program
Freddie Mac created the Freddie Mac Enhanced Relief Refinance to help existing Freddie Mac mortgage owners with little or no equity refinance into lower monthly payments. Of course, some requirements determine your eligibility for a refinance. Your home equity increases as you settle your mortgage, and the home value increases.
Since you need specific home equity to qualify for a refinance, these equity requirements can be problematic in cases where there’s no increase in home price, or worse still, when home prices are falling.
If you made a down payment before purchasing your home or a drop in the home value since you bought the property, it might be pretty challenging to meet a lender’s refinancing requirements.
We can liken the rise of real estate values to the market’s competitiveness in recent years. However, this competitiveness contributes immensely to the reducing number of high Loan to Value Ratio among homeowners currently.
Most homeowners don’t bother checking their eligibility status with their lender, even as that’s the only way to determine if you qualify for a mortgage. Checking your eligibility with your lender might help you discover facts that you may not know about your property or mortgage previously, both positive and otherwise.
Freddie Mac enhanced relief refinancing government program (FMERR) also allows you to refinance if the property’s value is lower than your outstanding debt. Unlike other loan programs, Freddie Mac removes any LTV maximums associated with this type of mortgage.
Eligibility Requirements for Freddie Mac Enhanced Relief Program
Although the enhanced relief refinance program is a joy to homeowners, not everyone who qualifies for mortgage stimulus programs qualifies for a Freddie Mac mortgage relief. Here are some of the requirements you can use to determine your qualification for this program.
- Your existing mortgage must be Freddie Mac-owned. You can use an online lookup tool to check if your mortgage is
- Only recent borrowers are eligible. Specifically, only loans obtained after November 1st, 2018, are considered for refinancing
- The loan to value ratio of your property should be at least 97.01 percent
- Your current mortgage and the date of the new loan must be at least 15 months apart for the mortgage company to consider your mortgage
- You must have no 30 days late payments in the last six months and not more than once in the previous year
Fannie Mae HIRO Program
The Fannie Mae HIRO program is for homeowners with conventional mortgages that want a regular refinance but without enough home equity on their loan. Homeowners who have seen their properties reduce in value will love this program especially.
Most lenders will require you to own at least 20 percent of your home to qualify for the program. However, they could accept lesser if you have a decent debt-to-income ratio or credit score.
Furthermore, you can refinance with Fannie Mae HIRO program if you have less than three percent equity or even if your mortgage is underwater. Your mortgage is said to be underwater if you owe more than your home’s worth.
Refinancing under the Fannie Mae scheme comes with lots of pros and cons. You get the opportunity to replace your mortgage with one that has an entirely different interest rate, monthly payments, and sometimes loan term.
However, you should carefully find a lender with the best rates because sometimes homeowners think they’re paying less in refinanced mortgages while they aren’t.
Eligibility for the Fannie Mae HIRO Program
The requirements to become eligible for a Fannie Mae HIRO Program includes:
- Your current mortgage must be a Fannie Mae conventional mortgage before you can apply for a HIRO Program. This requirement implies that you can’t use this particular refinance program for Federal Housing Administration (FHA), Veterans Administration (VA), and United States Department of Agriculture (USDA) loans
- It must’ve been 15 months since you either closed on your current mortgage or refinanced
- You should have more than a 97 percent LTV ratio for a primary residence. Note that the loan company may decide to change the minimum LTV ratio you’re refinancing a second home or investment property
- The refinance must help your financial situation before the mortgage company can approve it. For example, the loan should carry a lower interest rate, monthly payments, or even shorter term for the loan institution to consent to the refinance. Fannie Mae won’t consider a refinance with loan terms harsher than your former mortgage
- You must have no 30 day late payments in the last 6-months and not more than one 30 day delinquency in the previous year
Should You Apply for the Fannie Mae Hiro Program?
The Fannie Mae HIRO Program allows you to refinance your loan with a much higher LTV ratio than other refinance programs. Additionally, refinancing into a fixed-rate mortgage might be the way to go for people suffering from financial crises because you’ll save money as the loan terms will be more economically friendlier than your current mortgage.
However, note that you’ll have to pay closing costs like most other mortgage relief programs. Lastly, if your current mortgage isn’t a Fannie Mae-backed mortgage, you’re ineligible to apply for the refinance.
Streamline Refinance for FHA VA, and USDA Loans
Streamline Refinance is a program for people with FHA, VA, or USDA mortgages. Loan firms design them to make refinancing more feasible for individuals with government-backed loans. Unlike the Fannie Mae and Freddie Mac refinance programs, you can carry out refinance without lenders needing to check income, credit, or employment.
Additionally, you can refinance with little or no home equity. Another benefit of a streamlined refinance is that having a lower credit score won’t increase your interest rate. Since the refinance company won’t inspect your employment or financial status, you can technically refinance your mortgage even if you’re currently unemployed.
Who Can Use a Streamline Refinance?
Streamline refinance is available for all individuals with a government back loan program. However, having a government-backed loan doesn’t automatically qualify you for the refinance, as you still need to meet certain eligibility.
Note that homeowners with conventional mortgages can’t apply for a streamline refinance. So you can use a streamline refinance on a Freddie Mac or Fannie Mae loan program. With a Fannie Mae-backed loan, you can qualify for the Fannie Mae HIRO program, similar to a streamline refinance in terms of the low rates and the likes.
Types of Streamline Refinance
There are many different types of streamline refinances; the FHA streamline refinances for FHA loans, the VA streamline refinance “IRRRL” (for VA loans), and the USDA streamline refinance.
- FHA Streamline Refinance
The refinance is a federal mortgage relief program available for homeowners with FHA-insured mortgages. To be eligible for the FHA refinance, you must not have had any refinance in the last 210 days, at least 3-months prompt mortgage payments, and it must provide you a clear benefit.
- VA Streamline Refinance “IRRRL” (for VA loans)
The Interest Rate Reduction Refinance Loan (IRRRL) is accessible for homeowners with VA-guaranteed mortgages. You can only access this refinance option if you currently or have previously occupied the home. Other eligibility requirements require you to provide proof that you don’t have more than one delinquency in the last 12 months of your refinance.
You must benefit directly from the refinancing, mainly in the form of reduced mortgage payments except for the ARM-to Fixed Rate Refinance option. The Department of Veteran Affairs backs the VA Streamline refinance. Furthermore, home appraisals are not required for the refinance.
- USDA Streamline Refinance
THE USDA Streamline Refinance is available for homeowners with USDA-backed home loans. You can only refinance your primary residence in this refinance scheme. There should be no payment delinquency in your loan over the last 12 months of your mortgage. Lastly, there are no income or employment verifications and the refinance program requires no home appraisals.
Conclusion
This concludes some of the most popular government relief programs in 2022 to help with your mortgage loans. If you’re thinking of applying for a refinance, this article will help weigh the pros and cons to determine if it’s beneficial. Consider the eligibility requirements and ensure you qualify before applying to avoid time wastage.
The Freddie Mac and Fannie Mae conventional relief programs are the most popular among homeowners. This article has explained all you need to know about these relief programs, including the eligibility requirements and some of the terms and conditions.
