As the implementation of the new Refi fee nears, you might be wondering if there are any mortgage relief refinance programs at your disposal this year. The answer is yes; indeed, there are programs you should try. Most people are only aware of the popular relief programs such as the Home Affordable Refinance Program (HARP), Home Affordable Modification Program (HAMP), and Freddie Mac Enhanced Relief Refinance (FMERR), and the mortgage relief options under the CARES Act. However, I hate to break it to you that HARP, HAMP, and FMERR are already expired, while the options under the CARES Act are set to expire soon.
So with that, what options do you have? Fortunately, there’s one large-scale mortgage relief refinance program in 2020 that is significantly helping homeowners the way HARP and FMERR did; the Fannie Mae High LTV Refinance Option (HIRO). HIRO is actively helping homeowners refinance their mortgages with little or no equity at all. In other words, HIRO is intended for homeowners planning to refinance in today’s low rates but don’t have enough equity for a traditional refi.
While a lack of equity or low equity is a hurdle to millions of homeowners, HIRO is designed to help borrowers/homeowners deal with this problem. Interestingly, HIRO also helps borrowers who owe more on their homes than its worth. These borrowers/homeowners can lock in a lower rate and more affordable mortgage payments through the HIRO program.
Who qualifies to get HIRO?
Homeowners who have an active Fannie Mae-backed mortgage loan are the only ones who qualify for HIRO. If you’re unsure whether your loan is Fannie Mae-backed, you can find out at Fannie’s LookUp tool here.
Other requirements for HIRO include:
- The mortgage was originated on or after Oct. 1, 2017
- You’ve held the mortgage at least 15 months before applying for HIRO.
- You made no payments more than 30 days late in the last six months.
- You made no more than one payment up to 30 days late in the past 12 months and have no payments greater than 30 days late.
Additionally, the HIRO refinance must bring a “net tangible benefit” for the homeowner/borrower. In other words, the relief program must result in at least of these four benefits:
- Reduced monthly principal and interest payment.
- Lower interest rate.
- Shorter amortization term.
- More stable mortgage products, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage.
Moreover, HIRO applies to properties with current loan-to-value (LTV) rations as follows;
|Type of residence||No. of Units||LTV required for HIRO|
|97.01% or higher
85.01% or higher
75.01% or higher
|Second-home||1-unit||90.01% or higher|
|Investment property||1-4 unit||75.01% or higher|
However, the program has no maximum LTV for 30 and 15-year fixed-rate mortgages. This means that even if your current loan has 125% or 150% LTV, you’re still eligible.
Another good thing about HIRO is that it has no debt-to-ratio ceiling, and it doesn’t need you to provide any bank statements unless your payment is increasing by 20% or you are removing a borrower.
Folks, the HIRO program is an excellent option that has come at the right time. If you need to refinance your mortgage and your home has no or low equity, don’t panic. Try the HIRO program.
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Disclaimer: The views and opinions of Eric Lawrence Frazier are his own and do not necessarily represent First Bank or any organization affiliated with Eric Lawrence Frazier, or the Power Is Now Media Inc. First Bank is an Equal Credit Opportunity Lender. Eric Lawrence Frazier, MBA, is also a Vice President and Mortgage Advisor with First Bank. NMLS#461807 and a California Licensed Real Estate Broker DRE# 01143482. Email: Eric.firstname.lastname@example.org. Ph: 714- 475-8629.
Eric Lawrence Frazier MBA
President and CEO
The Power Is Now Media Inc