We Know Government Loans
FedHome Loan Centers specializes in delivering advantageous government loan products and providing solutions for customers seeking flexible credit qualifying requirements with low out-of-pocket costs. Today, the best loan products for someone with perfect or even bad credit are government insured home loans. VA, USDA and FHA first time home buyer programs offer $0 down / low down payments, low interest rates and relaxed credit standards. In some cases we can approve buyers with less than a 585 FICO score.
Government backed loans are easier to qualify for and require less money down that conventional loans.. VA and USDA loans are currently the best way to buy a home, and the only mortgage with zero down payment required. HUD / FHA only requires a 3.5% down-payment . This program allows the downpayment funds to come from family, friends, a 401k or from a housing grant. Unlike conforming loans, these programs also accept borrowers with fair/bad credit.
Using Government Loans To Refinance A Home
The Village Home Inspector | Nov 30, 2021
Government loans that are administered by the Federal Housing Administration , the Department of Veteran Affairs , and the U.S. Department of Agriculture are outstanding for buying a home. However, what most people dont know is that these loans can also be used to refinance a home. Each one of these loans offers multiple refinancing programs that provide different benefits for applicants who apply for them.
Using an FHA refinancing loan allows borrowers to use the equity that is left on their home to get some cash-out, to adjust the repayment term or to receive lower rates. Additionally, these loans can also benefit applicants who have a less than stellar credit score of 580 or, at times, even less.
FHA currently offers several different types of Refinancing loans, which include a Cash-Out Refinance, a Streamline Refinance, and a Simple Refinance. Each one of these loans has its own benefits and potential drawbacks. Therefore, it is crucial to know the difference between each one of them.
– Cash-Out Refinance
This type of refinancing is excellent for anyone whose property has increased in value of the years they have owned it. This loan works by letting the borrower take out a more significant loan amount to refinance their existing mortgage.
The money that is taken out can be used for any purpose. Common uses are student tuition, medical debt, home improvement expenses, a new car, etc.
– Streamline Refinance
Fha Va And Usda Refinancing
And there are “low-doc” versions, too.
“For a refinance, both FHA and VA offer a ‘streamlined’ version that reduces or eliminates the need for income-qualifying documentation. In most instances, there is no appraisal required,” Pataky says.
The USDA also offers streamlined and non-streamlined refinancing on its direct and guaranteed home loans.
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Using Gift Money For Down Payment Assistance
Conventional loans allow you to get gift money for your down payment from your family, domestic partner and fiancé.
Government-backed loans allow you to get down payment assistance from all of the above and:
- Labor unions and employers
- Your state housing finance authority
- Charities and community organizations
Should A Senior Refinance Their Mortgage
Seniors who want to be debt free in retirement may not want to refinance into a longer loan term. However, you might be surprised to find that lenders offer terms other than 15- or 30-year mortgages. If you currently have eight years left on your mortgage and you dont want to restart the clock on a 15-year loan, ask about refinancing into a five-, eight-, or 10-year loan.
Being debt-free isnt an important goal for many seniors, though. If this describes your situation, you may want to refinance to take advantage of the equity in your home. As long as you can afford the monthly payments on your new loan, refinancing can allow you to access more equity at a lower cost than a reverse mortgage would.
There are a few other things youll want to consider before refinancing your mortgage as a senior. Think about whether you might end up downsizing, moving in with a relative, or relocating to a senior living community as you age. And, if youre married, also think about whether you or your spouse might want to move out upon the others passing.
Amy Fontinelle is a mortgage and credit card authority and a contributor to Credible. Her work has appeared in Forbes Advisor, The Motley Fool, Investopedia, International Business Times, MassMutual, and more.
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How Does Refinancing Help The Economy
Millions of homeowners who refinance could see hundreds of dollars in savings each month, but that money does more than just help individual families. Those homeowners will have more money to pay bills, more money to spend in shops and restaurants in their communities, or more money to save for college or new car. In turn, this spendingmade possible by refinancingwill benefit our entire economy, and help spur the growth we need.
What About Underwater Homeowners
When the housing bubble burst, home values dropped, and millions of homeowners who did the right and responsible thingshopped for a home, secured a mortgage, and made their payments on time each monthwere left with houses worth less than they paid for them and mortgages worth more than their homes. Today, many of these homeowners are locked out of refinancing because they are underwater or because their credit took a hit.
The proposal now being considered in Congress will help millions of these families. Whether your home has fallen in value or your credit was harmed, as long as you’ve been paying your bills on time in recent months and your loan is backed by Fannie Mae or Freddie Mac, you will finally be able to refinance.
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New Option Allows Borrowers To Save Up To $3k A Year
Government-sponsored mortgage giants Fannie Mae and Freddie Mac have launched a refinance program with reduced interest rates that could save financially disadvantaged borrowers as much as $250 a month.
“Last year saw a spike in refinances, but more than 2 million low-income families did not take advantage of the record low mortgage rates by financing,” says Mark Calabria, director of the Federal Housing Finance Agency, which regulates Fannie and Freddie.
To qualify, borrowers must have a federally backed mortgage and earn no more than 80% of their areas median income.
A lender will be required to cut a qualified borrower’s monthly mortgage payment by $50 or more and provide at least a half-point interest rate reduction say, from 3.5% down to 3%.
This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment, Calabria said in a news release when the program was first announced.
Government Options For Refinancing
The available standard mortgage loan options are more restrictive as the 21st century advances. Government loans offer some interesting and cost-effective options. Government loan popularity, highest since the end of World War II , results from the disappearance of many of the former “creative” mortgage loan types and their excellent qualification rules. Understanding the available government loan options helps homeowners make the best refinancing choices.
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Usda Single Family Direct Home Loans
Single Family Housing Direct Home Loans are offered, as the name suggests, directly from the USDA, making them different from most of the other government-insured loans discussed in this article. These loans provide payment assistance to qualified borrowers to reduce their mortgage payment for a limited period of time.
The program is for low- and very low-income applicants. The amount of assistance offered is based on borrowers adjusted family income, but as with Single Family Housing Guaranteed Loans, no down payment is required.
The interest rate on USDA Direct Home Loans can be as low as 1%, and may be repaid over a term of up to 38 years.
Along with meeting the income eligibility requirementswhich are lower in this caseborrowers must also be without safe, decent and sanitary housing, and must be financing a property of 2,000 square feet or less in an eligible rural area, as defined above.
Along with home purchase costs, the funds from this loan program can also be used to to build, repair, renovate, or relocate a home, as well as to cover costs associated with preparing land for dwelling such as drilling a well or installing a septic system.
Refinance Credit For Fha
Refinance credit is upfront MIP that was paid but not earned by HUD. Any refinance credit from the prior case is applied to the new case when an upfront MIP payment is remitted for the new case. Please note the following:
- Refinance credit is calculated based on the closing or disbursement date provided.
- For the new case, a $0 payment can be sent to get any credit left on the prior case applied to the new case and flag the prior case for insurance termination when the new case is endorsed for FHA insurance.
- On the FHA Connection, Refinance Credit Queryon the Case Processing menu provides the refinance credit available for an active FHA-insured case that is being refinanced .Case Master Summary on the Upfront Premium Collection menu and Refinance Authorization on the Case Processing menu provide the Refinance Authorization Number and refinance credit amount applied to the new case. The Refinance Authorization Number indicates approval to refinance the prior FHA-insured loan as a new FHA-insured loan.
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We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
Refinancing With A High Loan
Mortgage relief programs flip the rules around.
Instead of staying under a maximum LTV ratio, your loan must be at or above a minimum LTV ratio.
For instance, Fannie Maes HIRO program and Freddie Macs FMERR program could only be used with an LTV at or above 97.01 percent. That means the homeowner could only refinance if they had 3 percent equity or less in the home.
The good news is, home equity has skyrocketed as bidding wars force home values up across the nation. That means current homeowners even those who arent planning to sell have seen their equity increase.
The result is that high-LTVs are no longer an issue for many Americans. With home values up, many owners are refi eligible they just dont know it yet.
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Is A Conventional Mortgage Right For You
While government home loans can help low- and moderate-income families establish housing with low or no down payment and competitive interest rates, theyre not the only option on the marketand in some cases, a conventional loan can be an equally savvy money move.
For one thing, many government-backed home loans restrict which properties and borrowers are eligible to participate. Conventional loans can offer the borrower more agency and flexibility.
While government home loans can help low-income families, theyre not the only option.
For homebuyers with credit scores in the very good or excellent categories and who have a substantial down payment, conventional loans may offer interest rates and terms that are nearly as attractive as those offered for government-backed mortgages. And if you can put down at least 20% on a conventional mortgage, youll avoid paying PMIwhereas every FHA loan requires mortgage insurance premiums.
Shopping around for the right mortgage is a lot of work, but its a worthwhile effort given how much money and hassle borrowers might save in the long run. SoFi offers a range of conventional, fixed-rate mortgages with competitive interest rates, low down payments, and personalized help through the homebuying process.
Borrowers who finance their home purchase with SoFi can put as little as 10% down . SoFi members can also save $500 on their mortgage loan or refinancing processing fees, and have access to a team of member specialists.
New Mortgage Refinance Program Helps Borrowers Save As Much As $3000 A Year
More than 2 million homeowners who thought they couldn’t afford refinancing which can provide big savings over time but takes a bit of cash upfront can get cheaper loans this summer through a new government option.
It allows more borrowers to refinance at today’s historically low mortgage rates, and cut their monthly housing costs by hundreds of dollars.
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Government Home Loans: A Comprehensive Guide
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.
Government home loans are issued or guaranteed by a federal agency. While there are well over a dozen variations of government loans, the three highest loan-volume programs are backed by the Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture.
“The most popular option is the FHA program. It’s by far the biggest,” says Bill Banfield, executive vice president at Quicken Loans. “And if you’re to say who would benefit the most, it’s going to be first-time home buyers. That is what the program is designed for.”
Other programs on the long list of loans backed by Uncle Sam are targeted to a wide range of borrowers. You’ll find mortgages for those with military connections, who live in rural areas, are looking to upgrade or renovate a home, or refinance an existing mortgage.
The Program Cuts The Cost Of A Refi
Refinancing costs vary by state and lender, but its not unusual to pay 3% or more of the amount you owe one your house in refinance fees: “closing costs.”
If you qualify for the FHFAs new program, your lender must provide a credit of up to $500 for an appraisal if you need one and waive the usual 0.5% fee for borrowers with loan balances at or below $300,000.
But to be eligible, you must not have missed a payment in the past six months and have no more than one missed payment in the past 12 months.
Plus, you must meet specific requirements related to how much debt you’re carrying and how much equity you have in your home.
Finally, you can’t have a credit score lower than 620. If youre not sure if yours will make the cut, its easy to peek at your credit score for free.
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Finding The Best Government Loan Lender For You
“When you talk about access to credit and people that might need the flexibility of these programs they may reach out to one lender and get one answer, and they might reach out to another lender and get a completely different answer,” Banfield says.
Borrowers should always shop multiple mortgage lenders to find the best terms and most suitable options for their personal situation.
Refinancing Fannie Mae And Freddie Mac Loans
Fannie Mae and Freddie Mac are rolling out programs to make refinances more accessible to lower-income borrowers. These programs will:
- Provide a savings of at least $50 per month
- Provide an interest reduction of at least 0.5%
- Provide a credit of up to $500 to cover an appraisal if the borrower doesn’t qualify for an appraisal waiver
To qualify, borrowers must:
- Have a loan backed by Fannie Mae or Freddie Mac
- Have a single-family, owner-occupied home
- Have an income at or below 80% of the area median income
- Not have missed a payment in the past six months
- Not have missed more than one payment in the past 12 months
- Not have a loan-to-value ratio above 97%
- Not have a debt-to-income ratio above 65%
- Have a FICO score of 620 or higher
Fannie Mae’s program, called RefiNow, started on June 5, 2021. Freddie Mac’s program, called Refi Possible, is starting in late August 2021.
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Where To Get A Reverse Mortgage
Two financial institutions offer reverse mortgages in Canada. HomeEquity Bank offers the Canadian Home Income Plan , which is available across Canada. You can get a reverse mortgage directly from HomeEquity Bank or through mortgage brokers. Equitable Bank offers a reverse mortgage in some major urban centres.
Shop around and explore your options before you get a reverse mortgage. Your financial institution may offer other products that might meet your needs.
Compare the costs of the following potential alternatives to a reverse mortgage:
- getting another type of loan, such as a personal loan, line of credit or credit card
- selling your home
- renting another home or apartment
- moving into assisted living, or other alternative housing
You may want to speak with a financial advisor and your family before getting a reverse mortgage. Make sure you understand how a reverse mortgage works and how it can affect your home equity over time.
Section 184 Indian Home Loan
A loan offering for Native Americans, Alaska Natives and members of other designated villages and tribes allows low down payments and relaxed credit standards. Mortgage purposes can include new construction, existing homes, improvements and loan refinancing.
The Department of Housing and Urban Development’s Section 184 program offers the same benefits to Native Hawaiians. Find complete details and participating lenders at the HUD Section 184 page.
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