All You Need to Know About Getting Help From Florida Mortgage Relief Programs
While mortgages have always been a necessity for homeownership, they have also been a source of stress for many Americans. This has only become more true in recent years as the cost of living continues to rise while wages stagnate. Home prices have been skyrocketing, leaving many people struggling with making monthly payments.
With standard loans now requiring 10-20% equity before refinancing is an option and many people still upside down on their homes, the government has come up with a few different programs to help those in need.
According to Freddie Mac, a leading source of residential mortgage rates in the United States, the average 30-year fixed-rate mortgage fell to 2.65% in early January 2021. While this is good news for new home buyers and those looking to refinance their current mortgage, others owe more than their home is worth. For these individuals, a traditional refinance is not an option.
Most people have turned to mortgage relief programs for assistance. These programs are designed to help people struggling to make their monthly payments or are at risk of foreclosure.
However, before applying to any program, it is vital to understand the different types of assistance available and how they work. You need to know about getting help from mortgage relief programs.
What are Mortgage Stimulus Programs?
The rapidly rising cost of homeownership has left many people struggling to refinance or even make their monthly payments. The government has put forth different stimulus programs to cushion against a sharp increase in foreclosures.
Mortgage stimulus programs provide financial assistance to homeowners struggling to keep up with their mortgage payments. While the specifics of each program may differ, most mortgage stimulus programs offer some form of deferment, forbearance, or modification to your mortgage terms.
With the low mortgage rates, most homeowners can significantly lower their payments. This can include reducing your interest rate or monthly payments. It's crucial to check your eligibility for these programs to determine whether you could benefit from reduced monthly payments and low-interest rates.
Types of Mortgage Stimulus Programs
A few different mortgage stimulus programs are available to assist homeowners from financial distress. The three most common are the Home Affordable Refinance Program (HARP), the Freddie Mac Enhanced Relief Refinance (FMERR) program, and Fannie Mae High LTV Refinance Option (HIRO) program. Each program has different eligibility requirements and offers distinct benefits.
Home Affordable Refinance Program (HARP)
The Home Affordable Refinance Program (HARP) was a federal government-sponsored program that helped homeowners refinance their Fannie or Freddie-owned mortgages. It was live between 2009 and 2018 and allowed homeowners to refinance even if they were underwater on their mortgage.
Before 2009, it was hard for consumers to refinance if they had little or no home equity despite being current on their mortgage payments. Even when interest rates dropped below 4%, most homeowners were left stuck with 6% interest rates, costing them hundreds of extra dollars per month in payments and struggling to make ends meet.
The HARP program was created to provide these homeowners with some relief. It allowed them to refinance their mortgage to a more favorable interest rate and helped to reduce their monthly payments.
This program was a lifeline for many homeowners struggling to keep up with their mortgage payments. Up until its expiration in 2018, over 3.5 million homeowners had successfully refinanced through the HARP program.
After its expiration, the government launched the Fannie Mae High LTV Refinance Option (HIRO) and the Freddie Mac Enhanced Relief Refinance (FMERR) program to replace the HARP program.
Fannie Mae High LTV Refinance Option (HIRO)
Update - Fannie Mae announced the discontinuation of the HIRO program in May 2021 due to low demand and the impact of the revised QM Rule. The nationwide increase in home equity has made many homeowners qualify for refinancing without needing a relief program such as HIRO.
The Fannie Mae High LTV Refinance Option (HIRO) program replaces the HARP program. It is available to homeowners with a Fannie Mae-backed mortgage who are current on their payments but owe more than their home is worth.
Like the HARP program, it allows these homeowners to refinance their mortgage to a lower interest rate and monthly payment. You can qualify for HIRO even when you are underwater on your mortgage, meaning you owe more than your home is worth.
Lenders require at least 20% equity in your home, but you might still qualify if you have a stellar credit score or other compensating factors like debt-to-income ratio. After qualifying, you will refinance to another conventional mortgage with new monthly payments, interest rates, and terms.
While you may decide to refinance with your original mortgage lender, it's best to shop for a lender with the best terms and rates before deciding.
HIRO Eligibility Requirements
Not all homeowners will qualify for Fannie Mae's HIRO program. There are several eligibility requirements you must meet to be approved:
Your mortgage must be owned or guaranteed by Fannie Mae. You can check if Fannie Mae owns your mortgage by visiting their website and entering your information into their Loan Lookup tool. Your loan must also have originated after October 1, 2017.
You must be current on your mortgage payments. This means you have made all mortgage payments on time for the last 12 months with no 30-day late payment in the last six months.
Your loan-to-value ratio must be more excellent than 97%. If you are refinancing your primary, single-family residence mortgage, you need to have less than 3% equity in your home.
If you previously refinanced your mortgage through HARP, you are not eligible to refinance through HIRO. HARP was a Fannie Mae program, so if your mortgage is owned or guaranteed by them, you do not qualify for HIRO.
- At least 15 months must have passed since you closed on your original mortgage.
The HIRO program can save you money each month by reducing your interest rate and monthly payment. If you are current on your mortgage but owe more than your home is worth, HIRO could be a good option for you.
Freddie Mac Enhanced Relief Refinance (FMERR)
Update - With increased home equity across the country and decreasing need for refinancing assistance, Freddie Mac has temporarily suspended the FMERR program due to low applications. You can contact a lender to see if you might still qualify for a refinance.
The Freddie Mac Enhanced Relief Refinance (FMERR) program is similar to the Fannie Mae HIRO program. It is available to homeowners with a Freddie Mac-backed mortgage who have limited equity in their home.
Like HIRO, it allows these homeowners to refinance to a lower interest rate and monthly payment by taking advantage of low-interest rates. As long as you are current on your mortgage and have made all payments on time for the last 12 months, you might qualify for FMERR.
While most lenders require at least 20% home equity before qualifying for a refinance, Freddie Mac only requires 3% equity in your home. This makes it easier for those who struggle to keep up with their mortgage payments but have seen their home values increase since they originally purchased their home.
FMERR Eligibility Requirements
To qualify for Freddie Mac's FMERR program, your mortgage must meet the following requirements:
Be owned or guaranteed by Freddie Mac. You can check if Freddie Mac owns your mortgage through their Loan Lookup tool.
If you have already refinanced it, the initial conventional mortgage must have closed on October 1, 2017, or November 1, 2018.
You must be current on your mortgage payments with no 30-day late payment in the last six months and no more than one 60-day late payment in the last 12 months.
- Less than 3% of equity or an LTV ratio of over 97% is required.
With the FMERR program, you can benefit financially by refinancing to a lower interest rate, resulting in a lower monthly mortgage payment. You can also switch from an adjustable-rate mortgage to a fixed-rate mortgage. This can help you better budget your monthly expenses as you'll no longer have to worry about your interest rate going up and costing you more each month.
Congress Mortgage Stimulus and COVID-19 Mortgage Relief
The COVID-19 pandemic brought many changes and challenges for homeowners across the country. And while there is no mortgage stimulus from Congress, President Joe Boden signed the $1.9 trillion American Rescue Plan into law in March 2021 to help struggling households and homeowners due to the pandemic.
It included stimulus checks to help cushion the blow of job loss or reduced income and extended unemployment benefits and rental assistance. The Homeowner Assistance Fund (HAF) helps eligible homeowners keep up with their monthly mortgage payments and other housing-related costs, including homeowners insurance, HOA, utility bills, and property taxes.
To qualify for HAF, you must have a mortgage balance of $548,250 or less and must have average or below-average income. You can apply for the Homeowner Assistance Fund through your state or local government's website.
Understanding Mortgage Forbearance
If you're struggling to make your mortgage payments, you might be considering forbearance. Mortgage forbearance allows you to temporarily stop making payments or reduce your monthly payment for a specified period. This can be a useful option if you've lost your job, had a reduction in income, or are facing unexpected financial expenses.
It's important to note that forbearance is not forgiveness, and you will still be responsible for the payments you missed once the forbearance period ends. Forbearance can also negatively impact your credit score, so it's essential to consider your options before deciding if forbearance is right.
While most mortgage lenders offer forbearance, each lender has its process and requirements. It's essential to contact your lender as soon as you start having trouble making payments to discuss your options and find out if you're eligible for forbearance.
Government-backed loans such as VA, USDA, and FHA or those owned by Freddie or Fannies have more defined benefits, processes, and protections. You can pause or reduce your payments for 18 months in extreme hardship cases. You won't face additional penalties, fees, or interest during forbearance.
Government-Backed Low-Interest Rate Loans to Streamline Refinancing
While Freddie Mac's FMERR and Fannie Mae's HIRO programs can help you lower your interest rate and monthly mortgage payment, you can't take advantage of these programs if you're not already a Freddie or Fannie borrower.
However, other government-backed programs can help you streamline the refinancing process and get a lower interest rate. These programs help homeowners reduce their mortgage interest rates even when your home's market value is lower than your mortgage balance.
The Federal Housing Administration (FHA), the United States Department of Agriculture and the Department of Veterans Affairs offer Streamline Refinance programs even if your mortgage is underwater.
These refinance options are quick and affordable, with fewer eligibility requirements. If you have an FHA, USDA, or VA loan, you may be able to lower your interest rate and monthly payment by refinancing into a new loan with a lower interest rate.
Federal Housing Administration Loan Programs
An FHA loan is a home mortgage backed by the US Federal Housing Administration. FHA loans are available to all borrowers, including first-time buyers and low to moderate-income families, and require a lower minimum down payment than other loans.
FHA loan requirements are less rigid than traditional loans, making them a good option for first-time buyers or borrowers with less-than-perfect credit. Additionally, they require lower credit scores than is the case with most conventional loans. It requires a down payment between 3% and 20% and a FICO score from 500 upwards. A history of foreclosure or bankruptcy could hurt your eligibility.
United States Department of Agriculture Loan Programs
Farmers, foresters, and ranchers in rural areas can apply for a US Department of Agriculture (USDA) loan to finance the purchase of land, equipment, or livestock when they need to start or expand their family farm.
Housing funds are available for homeowners and renters in most rural areas of the United States. USDA loans are available to borrowers with low or moderate incomes and offer competitive interest rates and terms. USDA's homeownership opportunities provide funding to individuals to help them renovate and improve their homes into decent, sanitary, and safe living conditions.
Department of Veterans Affairs Loan Programs
The Department of Veterans Affairs (VA) offers several home loan programs to veterans, active-duty service members, reservists, National Guard members, and certain surviving spouses.
VA loans are backed by the US government and offer several benefits, including no down payment, limited closing costs, and competitively low-interest rates. VA loans can be used to finance the purchase of a home, make energy-efficient improvements, or refinance an existing loan.
To qualify, you must be a veteran, active-duty service member, reservist, National Guard member, or a certain surviving spouse. You also must have a good credit history and sufficient income to make your monthly payments.
These government-backed loan programs offer competitive interest rates and terms, making them a good option for refinancing your home. If you're struggling to make your monthly mortgage payments or are interested in lowering your interest rate, contact your lender to see if you qualify for these programs.
The Streamline Refinance program is an existing homeowner's opportunity to lower their monthly mortgage payments by refinancing into a new loan with a lower interest rate. If you currently have an FHA, USDA, or VA loan, you may be eligible to refinance into a new loan with a lower interest rate. The Streamline Refinance program is a quick and easy way to lower your monthly payments with minimal documentation.
To be eligible for the Streamline Refinance program, you must meet the following criteria:
You must be current on your mortgage payments, with no 30-day+ late payments in the last six months and no more than once in the last 12 months.
Your current loan must be an FHA, USDA, or VA loan
- You must not have already refinanced your home through the Streamline Refinance program
If you meet these criteria, you may be eligible to refinance your home through the Streamline Refinance program. Contact your lender to see if you qualify.
Several government-backed loan programs offer competitive interest rates and terms. Mortgage relief programs can help you lower your monthly payments or get a new loan with a lower interest rate. HIRO and FMERR are two programs that can help you if you're struggling to make your monthly payments.
If you're interested in refinancing your home, the Streamline Refinance program is quick and easy to lower your payments with minimal documentation required. Contact your lender to see if you qualify for any of these programs.