Underwater? New Refinancing Products in 2019

by Ben SanfordDecember 10, 2018

What Is a High-LTV Refinance and How It Can Help With My Mortgage?

On December 31, 2018, the Federal Housing Agency will be ending its Home Affordable Refinance Program (HARP). HARP originated in 2009 as a means for homeowners who were current on their mortgages, but had little to no equity in their homes, to refinance their mortgages at lower rates, so they can start building equity faster.

But while HARP may be ending, a new type of refinancing product will be kicking off in 2019 that will help underwater homeowners find the relief they’re looking for. It’s called the high-LTV (loan-to-value) refinance, or an Enhanced Relief Refinance – and it could be just the thing you’ve been looking for.

LTV Refinance

What Is a High-LTV Loan?

High-LTV refinances are a product of Fannie Mae, so only homeowners with mortgages through Fannie Mae are eligible for this type of refinancing. Further, the mortgages must have originated on or after October 1, 2017.

Homeowners with mortgages that were originated between June 2009 and September 2017 are not eligible and will have to refinance through a standard refinance program.

To qualify, borrowers must owe more than 97% of their home’s current value for primary, single-family residences. Multi-unit homes, second homes, and investment properties can also be refinanced under the program, but with lower minimum loan-to-value requirements.

  • 2-unit primary residence: Must owe more than 85% of their home’s current value
  • 3- to 4-unit primary residence: Must owe more than 75% of their home’s current value
  • 1-unit second home: Must owe more than 90% of their home’s current value
  • Investment property 1-4 units: Must owe more than 75% of their home’s current value

LTV Refinance

What Is an Enhanced Relief Refinance?

The Enhanced Relief Refinance is a product of Freddie Mac, so like Fannie Mae’s program, this is only available to Freddie Mac customers. The same date restrictions also apply to this product. To qualify for this refinance, “The LTV ratio for the new mortgage must exceed the maximum loan-to-value limit for a Freddie Mac standard ‘no cashout’ refinance mortgage.” The current maximums include:

  • Single-family primary residence: 95% LTV
  • 2-unit primary residence: 85% LTV
  • 3- to 4-unit primary residence: 80% LTV
  • Second home: 90% LTV
  • 1-unit investment property: 85% LTV
  • 2- to 4-unit investment property: 75% LTV

Additional Qualification Requirements

In addition to the above loan-to-value requirements, homeowners must also meet three other criteria, which include:

  • Homeowners must have made at least 12 on-time payments
  • No payments were 30-days late in the last 6 months
  • No more than one 30-day late payment occurred in the past year

To be eligible, the refinance also needs to be able to improve the homeowner’s existing mortgage. This can be via an interest rate deduction, a shorter-term loan, a lower monthly payment, or by replacing an adjustable-rate loan with a fixed-rate one.

LTV Refinance

Must Close on or After January 1, 2019

If you are underwater in your mortgage and you are interested in applying for one of these programs, then it should be noted that applications are being accepted now. You can learn more by visiting Fannie Mae‘s or Freddie Mac‘s website. Remember, though, that in order to take advantage of this type of refinancing, your closing will have to take place on or after January 1, 2019.

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About The Author
Ben Sanford
Ben is a real estate agent and freelance writer. He's lived on the east coast his entire life and is just as "at home" on a snowboard as he is in the office. When not writing about local real estate markets and researching hot new tips for homeowners, he can be found working on his home renovation projects with help from his wife Melissa and their kids, Josh and Cheyenne.