Mortgage refinancing has become a popular topic these days, and it's easy to see why. With interest rates at or near historic lows this could be the perfect time to refinance your mortgage.
Unfortunately refinancing isn't quite as simple as it once was. Credit standards have tightened considerably. Declines in property values may have robbed borrowers of the required equity to refinance at today's favorable terms. Programs such as FHA can also carry heavy insurance costs that can offset most or all of the benefit of a lower interest rate.
MassHousing's unique refinance product can help some borrowers who otherwise might not qualify. Since MassHousing's refinance program is offered with minimal equity, it does require that borrowers have good credit. Among the features and benefits:
- Limited cash-out refinance. You can pay off the existing first mortgage and cover closing costs
- Loan-to-Value-Ratios (LTVs) up to 97%. Most refinance programs are capped at 80% LTV, excluding homeowners who have lost equity due to declining property values
- Competitive rates. MassHousing's rates are in the low to mid 4s. If you have an interest rate above 5.5% and no mortgage insurance, you can save by refinancing with MassHousing—even if you have an LTV of 97% or more. The lower your LTV, the more you save
- MI lower than FHA. While a MassHousing loan above 80% LTV does require mortgage insurance, the cost is a fraction of FHA insurance premiums. No MI premiums need to be paid in advance, further reducing closing costs
- You do not need to have a MassHousing loan. MassHousing can refinance any existing first mortgage for an owner-occupant homeowner. This can be a real benefit for homeowners wanting to get out of an adjustable-rate mortgage
- MI Plus mortgage payment protection—which helps pay monthly principal and interest for up to six months in the event that the borrower loses their job—is available on every MassHousing refinance loan above 80% LTV
High loan-to-value ratios or mortgage insurance costs should not prevent homeowners from refinancing and lowering monthly mortgage payments. Learn more about a MassHousing refinance loan.