Best Mortgage Refinance Assistance Programs
Government Mortgage Refinance Programs
FannieMae Refinance Mortgage Program
- Allows borrowers to refinance existing mortgages that are owned by FannieMae
- Borrowers can refinance their existing FannieMae mortgage into a new mortgage with a loan-to-value (LTV) ratio up to 97.0%
- This program helps borrowers who have limited equity in their property refinance their loan into a new, potentially more affordable mortgage
FHA Streamline Refinance Program
- The Federal Housing Administration (FHA) offers a streamline refinance program that requires reduced qualification requirements as compared to a traditional mortgage refinance, saving current FHA borrowers time and money
- The FHA Streamline Refinance Program does not require an appraisal and there is no loan-to-value (LTV) ratio requirement so it is very useful if you are underwater on your mortgage
- The program does not require borrowers to provide their credit report or verify their income or assets although lenders may have their own borrower qualification requirements
VA Streamline / IRRRL Refinance Program
- The Veterans Administration (VA) offers a VA Streamline Refinance Program for eligible VA borrowers that requires limited qualification requirements as compared to a traditional mortgage refinance. The VA streamline refinance program is also known as an IRRRL (Interest Rate Reduction Refinancing Loan) or a "VA to VA" refinance
- With the VA Streamline Refinance Program, the borrower is not required to provide a property appraisal or credit report. Lenders, however, may apply their own mortgage qualification requirements
- Except when refinancing an existing VA adjustable rate mortgage (ARM) into a fixed rate mortgage, the VA streamline refinance must result in a lower interest rate. When refinancing from an existing VA ARM mortgage to a fixed rate mortgage, the interest rate may increase
- The VA Streamline Refinance Program is designed to save VA borrowers money on their refinancing as well as on their new monthly mortgage payments
USDA Streamline Refinance Program
Underwater / Distressed Mortgage Government Refinance Programs
- The USDA Streamline Refinance Program enables borrowers to refinance an existing USDA home loan with significantly fewer borrower qualification requirements than a standard mortgage refinance
- The Program does not require borrowers to obtain a property appraisal report, provide a credit report or meet debt-to-income ratio requirements
- There is no loan-to-value (LTV) ratio limit which means borrowers who are underwater on their mortgage are eligible
- By simplifying the refinance process, the USDA Streamline Refinance Program is designed to save eligible borrowers time and money.
Home Affordable Refinance Program 2.0 (HARP 2.0)
- The HARP 2.0 program is designed to help homeowners who are current on their mortgages but whose homes are underwater (the amount of the mortgage is greater than the value of the house) refinance their mortgages
- If your house is underwater it can be almost impossible to refinance your mortgage without using a government-backed program such as HARP 2.0
- HARP 2.0 is designed to help borrowers refinance into more affordable, more stable mortgages
FHFA Principal Reduction Modification Program
- The program is designed to help eligible, delinquent borrowers become current on their mortgage, reduce their mortgage payment and avoid foreclosure
- Program features include addressing past due payments, a reduction in interest rate, extending the mortgage term to 40 years and potentially reducing the principal mortgage balance through loan forbearance or forgiveness
Flex Modification Program
- The goal of the Flex Modification Program is to help struggling borrowers modify their existing mortgages into more affordable loans
- The Flex Modification Program targets distressed borrowers who are more than 60 days delinquent on their mortgage or who are in imminent risk of default
- The program is designed to reduce your monthly mortgage payment by at least 20% so that your total monthly housing expense is no more than 40% of your monthly gross income
- Eligible borrowers may be able to reduce their mortgage balance by up to 30% using the Flex Modification Program
- You should contact your current lender to determine if you are eligible for the program
Home Affordable Modification Program (HAMP)
- The HAMP Program expired on December 31, 2016 and was replaced by the Flex Modification Program (see above)
- The HAMP program provides lenders with financial incentives to help distressed borrowers modify their mortgages
- By modifying your mortgage through the HAMP program you may be able to lower your monthly mortgage payments in order to make them more affordable and sustainable for the long-term
Principal Reduction Alternative
- The Principal Reduction Alternative (PRA) was designed to help you by encouraging mortgage servicers and investors to reduce the amount of your mortgage
- THE PRA program is designed for borrowers who are significantly underwater on their homes
Second Lien Modification Program (2MP)
- The Second Lien Modification Program (2MP) is designed to help borrowers that have a home equity loan, HELOC, or some other second mortgage that is making it difficult for them to make their mortgage payments
- 2MP works in tandem with HAMP to provide comprehensive solutions for homeowners with second mortgages to increase long-term affordability and sustainability
Home Affordable Foreclosure Alternatives Program (HAFA)
- The Home Affordable Foreclosure Alternatives (HAFA) program is designed for borrowers that cannot afford their mortgage payments and recognize that it is time for them to transition to more affordable housing
- Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls "short" of the amount you owe on the mortgage. The deficiency is guaranteed to be waived by the mortgage servicer
FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)
- The FHA Short Refinance program is designed for borrowers with FHA-insured mortgages who are not behind on their mortgage payments but whose mortgages are greater than the value of their properties
- FHA Short Refinance is designed to help homeowners refinance into more affordable, more stable FHA-insured mortgage
Home Affordable Unemployment Program (UP)
- If you are unemployed and struggling to pay your monthly mortgage payment, the Home Affordable Unemployment Program (UP) may reduce your mortgage payments to 31% of your monthly gross income or suspend them altogether for 12 months or more
- To be eligible for the UP program you must be unemployed and eligible for unemployment benefits, occupy the house as your primary residence, have not previously received a HAMP modification and you must have obtained your mortgage on or before January 1, 2009
- Related FREEandCLEAR Resources
There are multiple mortgage refinance assistance programs available to borrowers. In general, the goal of refinance assistance programs is to help borrowers obtain more affordable mortgages or exit their existing mortgage with as little hardship as possible. There are different types of refinance programs depending on your situation plus each program has different eligibility and qualification requirements. Some programs are focused on borrowers who can afford their mortgage payment but who have limited equity in their home, which makes it very challenging to refinance.
For example, HARP 2.0, the Fannie Mae Refinance Program and the FHA, VA and USDA Streamline Refinance Programs all enable you to refinance your mortgage without obtaining an appraisal report. The programs require less documentation and also apply more flexible qualification guidelines, including higher or no loan-to-value (LTV) ratio limit which makes them especially applicable to borrowers whose homes are underwater, which means your mortgage balance is greater than the value of your property. Ideally, you can use these programs to refinance into a lower mortgage rate and more affordable monthly payment.
The downside to these mortgage refinance assistance programs is that they are not available to all borrowers or all types of mortgages. For example, the Streamline FHA Program can only be used to refinance and existing FHA loan. The same applies for the USDA and FHA Streamline Programs. Additionally, the HARP 2.0 Program can only be used to refinance Fannie Mae and Freddie Mac loans that were originated before May 31, 2009. While these programs offer significant benefits, you should make sure that you and your mortgage are eligible for them before applying.
Eliminating, or forgiving, a portion of your mortgage is a significant event so the qualification requirements are more challenging. In short, loan modification assistance programs are for borrowers in financial duress but who want to keep their homes. It is important to highlight that modifying your loan may be a taxable event so be sure to understand the tax consequences of these mortgage assistance programs.
Other refinance assistance programs are more focused on borrowers who are struggling financially who may not be able to pay their mortgage even if they lower their payment. The FHFA Principal Reduction Modification Program, Flex Modification Program and Principal Reduction Alternative Program are all loan modification programs that you may be able to use to lower your mortgage balance. Reducing your loan balance lowers your monthly payment and financial obligation which makes your new mortgage more affordable.
The final category of refinance assistance programs is for borrowers who know they cannot afford their home and want to transition out of their mortgage with as little financial impact as possible. The Home Affordable Foreclosure Alternatives Program (HAFA), allows you to sell your home without being responsible for the shortfall in paying off your mortgage. This makes it more manageable for borrowers to get out homes and mortgages they cannot afford.
Use the FREEandCLEAR Lender Directory to search for twenty-five mortgage programs including several refinance assistance options.
Mortgage refinance assistance programs are provided by different organizations. You apply for the HARP 2.0 Program, Fannie Mae Refinance Program and the FHA, VA and USDA Streamline Refinance Programs with participating lenders. You usually apply for the principal reduction and foreclosure assistance programs through a government agency or HUD-approved state or local housing agencies or commissions. These organizations may also offer additional homeowner assistance or foreclosure prevention programs that help you keep your home.
The table below summarizes numerous refinance assistance programs. Click on the program title to review more detailed information about each program. It is important to understand how each program works as well as their eligibility and qualification requirements so you can determine the best refinance assistance program for you.
Refinance Assistance Programs: http://myhome.freddiemac.com/refinance/understand-relief-refi.html
Mortgage Refinance Options: https://www.knowyouroptions.com/refinance/overview
Making Home Affordable Program: https://www.makinghomeaffordable.gov/pages/default.aspx
Distressed Borrower Refinance: https://www.consumerfinance.gov/ask-cfpb/if-i-cant-pay-my-mortgage-loan-what-are-my-options-en-268/