Many homeowners have been asking, what can I do if I can’t pay my mortgage? The Fannie Mae HIRO loan program could help.
Many American homeowners have suffered reduced income or loss of employment during this past year due to the coronavirus pandemic. Forbearance and loan modification programs can help, but many covid-related housing relief programs are expiring soon. Mortgage rates dropped again this week, and the Fannie Mae HIRO loan program could help you save money and avoid foreclosure.
How to Keep Your Home and Lower Your Monthly Mortgage Payment Long-Term
The Fannie Mae HIRO loan program is a mortgage relief program for homeowners who want to lower their mortgage payments but have little to no equity. By refinancing to a lower rate, you can take advantage of current low-interest rates and refinance your mortgage with an affordable mortgage payment.
When you use the HIRO loan program to refinance your mortgage, you can lower your rate and lower your monthly mortgage payment even if you have negative equity in your home (you owe more than your home is worth).
Talk to Your Lender About Mortgage Assistance & Verify Your Mortgage Type
First things first, if you’re having trouble paying your mortgage, call your lender right away to discuss your situation. Working with your lender can help alleviate some stress and buy time so you can decide the best way to lower your mortgage payment.
Federal agencies that guarantee government-backed mortgages have stepped in to offer mortgage relief. Some lenders and state agencies provide mortgage relief programs as well. Mortgage assistance depends on your situation and what type of loan you currently have.
- Conventional Loan
- Conforming Loan
- Freddie Mac or Fannie Mae
- FHA Loan
- VA Loan
- USDA Loan
- Another type of home loan
What is a HIRO Loan Program?
HIRO stands for “High LTV Refinance Option.” Fannie Mae and Freddie Mac offered a similar program (HARP), which expired on December 31, 2018.
The Fannie Mae HIRO loan program helps homeowners who have less than 3% equity in their home and are paying above-market mortgage rates. Even if you have negative equity (you owe more than the current value of your home), the HIRO mortgage refinance is an option.
Qualifying homeowners can refinance their current mortgage and secure a lower interest rate and monthly payment, avoiding foreclosure.
Private mortgage insurance (PMI) isn’t required, there’s no maximum LTV ratio, and you don’t have to use your current lender. There’s also a streamlined application process, no minimum credit score, and no maximum debt-to-income ratio.
Do I qualify for a High LTV Refinance Option?
To qualify for a high loan-to-value refinance program such as the Fannie Mae HIRO loan, homeowners must meet the following criteria:
- LTV ratio (loan-to-value ratio) must be 97% or higher*
- Current mortgage must be at least 15 months old
- Current mortgage must have a start date after September 30, 2017
- Your mortgage payments must be current for at least 6 months
- No more than one late payment in the past year
The new mortgage must offer a tangible benefit to be eligible. This means that the new mortgage through the HIRO loan program must provide at least one of the following:
- reduced mortgage interest rate
- lower monthly mortgage payment
- shorter loan term
- replace adjustable-rate loan with a fixed-rate home loan
* If you currently have an LTV ratio below 97%, there might be other relief programs available. Talk to a mortgage expert to learn more.
Beware of 3rd Parties Offering Mortgage Assistance
A lot of homeowners are worried about their mortgage. This means fraudulent parties are posing as lenders to take advantage of people. Make sure to talk with your current lender first.
When you start shopping for a mortgage relief program, check reviews and referrals and work with someone you trust. A trusted mortgage expert won’t pressure you to take action or charge you upfront fees to get started.
Working with an experienced mortgage broker makes all the difference when evaluating mortgage relief programs for 2021. If you’re thinking about the Fannie Mae HIRO loan program to lower your monthly mortgage payment, give us a call. We can help talk through your options and recommend the best fit.