FMERR Program Pros And Cons
It’s the American Dream to own your own home on your own land. It has been the dream of millions of immigrants who came before you, including your ancestors. Yet, inflation and an inability to save enough money to buy a home have become a growing problem over the decades and centuries since Europeans first put a foot down in this country. This is where Fmerr comes into play.
If you find that you cannot afford a home or can’t get a mortgage to refinance your home, you are not alone. Banks are on tighter and tighter lending restrictions, and home values and prices are skyrocketing. There are even instances where people are so desperate to buy a home that they are offering tens of thousands above the seller’s asking price just to get the house! When you already own your home, but you want to reduce interest and costs, you’ll want to check out the stimulus package for homeowners.
You should know that there are much easier ways to get financing and buy a home. One of those ways includes the FMERR government program. FMERR stands for “Freddie Mac Enhanced Relief Refinance program FMERR”. The Freddie Mac Enhanced Relief Refinance Program FMERR is meant to provide a helpful solution to homeowners who may be struggling to keep their homes because the interest payments on their current mortgages are so high.
If you would like to know more about this program and whether or not it can help you, the following is provided.
FMERR Is a Federal Mortgage Relief Program
Freddie Mac and the sister company, Fannie Mae, are both federally created and federally backed programs. That makes them federal mortgage relief programs. If that particular fact makes you very uncomfortable, then you may want to consider other refinance options.
Would You Qualify for the FMERR?
A government-backed program that almost guarantees approval of your refinanced mortgage sounds perfectly lovely, doesn’t it? The question you probably have (like most other homeowners in the same boat) is, “Do I qualify?”
Understandably the funds and the program do have limitations. If you fit the qualifications and abide by the rules, you will qualify.
Those qualifications include:
- You have less than 3% equity in your home. This means that your mortgage has not been paid down to the point that you have more than 3% of the original mortgage paid off. To give you an idea, an original $150,000 mortgage with compounded interest has to reflect a current balance of $145,500 OR LESS to qualify. that has been successfully paid off to
- You can’t refinance any other government-backed mortgage. This is only for homeowners who have a conventional mortgage and want to refinance.
- You have to have at least 15 months of steady mortgage payments behind you.
- You can’t be behind or in default, although you might see yourself ending up there soon.
- No late payments in the last six months, and no defaults in the last year that went more than two months at a time.
- If your loan-to-value ratio places you in debt for up to 105% of your home’s value, this program can help. Traditional lenders insist on 80%, which is not feasible for most borrowers.
- Financial benefits for you have to outweigh the costs and/or risks.
Income usually isn’t an obstacle with this program either, but you should have some form of income, even if it is disability income or Social Security.
Since 2018, there have been a few additional requirements for the Freddie Mac Enhanced Relief Refinance Program FMERR. These extra requirements include:
- Your current mortgage has to be owned by Freddie Mac. This may seem odd, especially if you have a conventional mortgage, but Freddie Mac does provide funding to several lenders and is the holder of said loans. Check your loan documents or check with your lender to find out if Freddie Mac owns your current mortgage.
- Your loan now has to have an origination date from Nov. 1st, 2018 or sooner. That’s not a lot of wiggle room for homeowners who have had a mortgage longer than four years.
- Debt-to-Income ratio may be affected, but it depends on the lender you choose and on your individual (not joint) income.
If you still qualify after the 2018 requirements are applied, then you can apply for the FMERR.
When Your Loan Isn’t Owned by Freddie Mac
If your current loan isn’t owned by Freddie Mac, you’re out of luck according to the 2018 restrictions and requirements. There is a way around this, of course. You would have to qualify for and take out a refi from Freddie Mac, and then wait a year and a half to qualify for the FMERR. You still have to meet all of the other requirements, which can be tricky when you have just taken out a refi mortgage with Freddie Mac.
A “Required” Appraisal for FMERR
With the property values at an all-time high right now, an appraisal for your home and property may not be necessary. The appraisal is to ensure that your property’s values haven’t dropped and that the lender won’t lose money if you default. Again, it might also depend on the lender, but in a market where home values are higher than the outer stratosphere, an appraisal probably isn’t needed.
On the flip side, you may want to know what your current property is worth. Its resale value right now, as well as the need to increase your insurance to protect it, is invaluable information. It might behoove you to consider selling your home if you can’t qualify for FMERR or a home refi mortgage.
FMERR IS NOT a HARP Replacement Program
In 2008, the real estate market bubble exploded. It would not be accurate to say it popped, since the results were much worse than a pop. Many homeowners found themselves upside down and underwater with their mortgages. President Obama decided to create the HAMP and HARP programs to help homeowners keep their homes and still afford their payments. This program is very different from the Freddie Mac programs.
Ergo, FMERR is NOT a HARP replacement. It is a different program with different requirements all its own, even though it ultimately assists homeowners in keeping their homes with lower mortgage payments. You should also know that HAMP and HARP both expired in the last few years and applying for them expired shortly after Obama left office. The Freddie Mac Enhanced Relief Refinance program FMERR picked up and took over when and where HARP ended.
An ARM vs. Fixed Rate
The good news here is that it doesn’t matter if you have an ARM or a fixed-rate mortgage. You can apply for either option to reduce your interest and reduce your payments. Some people prefer an ARM, while others prefer the sense of safety, security, and stability that a fixed-rate mortgage provides.
The Number of Borrowers Allowed
If you and your spouse were both listed on the original mortgage, this has to change on the FMERR. Only one of you should be listed to prevent accounting issues within the Freddie Mac agency. Additionally, you can’t add new people into the mortgage that weren’t on the old mortgage. However, if there are several people listed as having a vested interest in the same home and property, all of them are qualified candidates to take out the new loan so long as only one of them is listed as the borrower.
The Usual Interest Rates on FMERR
Typically the rates on a FMERR are lower than the current rates on a conventional loan. What those rates are you get depends on who facilities the paperwork and funding for the loan. One lender may charge 3.5%, while another lender down the street may charge 2.75%. It pays to shop around and see which lenders will charge less for interest rates on a FMERR.