The Fed just issued its first emergency rate cut since the 2008 financial crisis. And rates have fallen to all-time lows.
Homeowners who have waited patiently to see if rates will go lower finally have their chance.
According to Freddie Mac, the 30-year fixed-rate mortgage fell to the lowest rate ever recorded during the week of March 2, 2020.
The agency has been tracking rates for nearly 50 years.
But what about those who owe more than their home is worth and can’t refinance? What can they do? Up until 2018, there was HARP. Then there was FMERR, which expired on September 30, 2019.
Well, there’s a new relief refinance on the block: Fannie Mae’s High LTV Refinance Option, or HIRO Program.
TIP: With HIRO, lenders don’t care if you’re underwater. In fact, you have to have less than 3% equity to qualify! Check Your Eligibility Status Now
Standard loans require you to have 10-20% equity before a refinance is possible. If a homeowner is “upside-down” with a mortgage, the borrowers would either have to pay down the mortgage to an acceptable level or give up trying altogether. But with the HIRO Program, there’s hope.
The middle-class mortgage stimulus package
Some even call the HIRO program a middle-class stimulus program. Why? First, it replaces HARP, a loan program that was first enacted by Congress in 2009 to help millions of homeowners to refinance their mortgage and get a lower rate without needing any equity at all.
Second, the HIRO loan helps underwater homeowners reduce rates and payments, just as rates are falling to fresh lows.
A refinance can put serious money back into the pockets of middle-class Americans, which stimulates the economy — not to mention the everyday household.
HIRO comes with other advantages. You can often qualify for an appraisal waiver, saving hundreds of dollars. But even if you need an appraisal, value doesn’t matter. You can owe $200,000 on a home currently valued at $175,000 and still lower your rate with a refinance.
That leaves potentially thousands of homeowners who might have applied for the 2009 HARP, but didn’t get the chance before the federal government program expired.
Mortgage relief: You might qualify for a lower interest rate
The qualifications are relatively simple, but they are important. You may be eligible for HIRO if:
- Your current mortgage loan is owned by Fannie Mae.
- Your loan must have been originated after October 1, 2017.
- At least 15 months have passed from the note date of the existing loan to the note date of the new home loan.
- You have made all your payments on time in the last 6 months.
If you meet these conditions you are very likely to have access to lower rates. But you need to act now before rates go up. Remember, the program has no expiration date, but one could be imposed at any time. Speak with your mortgage lender about relief options.
Conventional loan refinance
If you have a conventional loan, refinancing might help you take advantage of historically low-interest rates and reduce your monthly payments. You’ll need at least 5 percent equity to refinance, although you’ll likely be subject to higher interest rates and fees if you have less than 20 percent equity.
Can I refinance from an FHA loan to a conventional loan?
Yes, and if you have 20 percent equity in your house, refinancing to a conventional loan may enable you to get rid of private mortgage insurance and reduce your monthly mortgage payments.
Check your eligibility
Step 1: Click your state on the map below.
Step 2: Enter your address, home info and contact info to check your eligibility and receive up to four competitive HIRO quotes.