Federal Programs for Mortgage Refinancing
- When the mortgage industry collapsed around 2007-08, Fannie Mae and Freddie Mac -- now part of the Federal Housing Finance Agency (FHFA) -- stepped in to help homeowners holding high-balance loans. Depending on what county you live in, you could receive a loan from these agencies for up to $729,750 for a single-family home (loan limits are higher in counties with higher costs of living). Typically, Fannie Mae and Freddie Mac impose a conventional maximum loan limit for the nation. This conventional loan limit is reviewed annually and is adjusted as required. Jumbo loans are any loans that exceed the conventional loan limit.
- Homeowners can refinance their loans with a Federal Housing Administration (FHA) loan. FHA allows higher loan-to-values (loan balance vs. home's value) than Fannie Mae and Freddie Mac. FHA's lending guidelines also allow less-than-perfect credit history. The streamlined loan refinancing program allows you to lower your interest rate or change your loan terms, often without an appraisal.
- The Veterans Administration (VA) offers loans to America's veterans and their spouses and widows. If you wish to refinance an existing VA loan, one option is the Interest Rate Reductions Refinance Loan (IRRRL). IRRRLs offer a streamlined refinance process, much like FHA programs. You are allowed to refinance your loan, finance your closing costs and include up to $6,000 of energy-efficiency improvements to the loan. As long as your new loan balance does not exceed your previous loan's maximum balance, an appraisal is not required.
- Homeowners with homes worth less than the balance of their mortgages can apply to the Obama Administration's Making Home Affordable program. This allows homeowners to refinance their home even if the loan is up to 125 percent of the home's value. Contact your current loan servicer or a new lender to see if you qualify.
