Refinance Options for Homeowners
PHFA offers the following Refinance loan programs for existing homeowners. What you choose will depend on your individual situation.
The Pennsylvania Housing Finance agency offers two conventional loan products that are designed specifically for HFAs (Housing Finance Agencies). These products offer a fully amortized 30 year fixed rate term. PHFA offers these programs through a network of approved participating lenders, with PHFA as the servicer. In other words, you will work with a lender up through the loan closing, but will make your monthly payments to PHFA for the life of your loan.
HFA Preferred Risk Sharing™(No MI)
The HFA Preferred Risk Sharing™(No MI) loan does not require mortgage insurance, which is insurance coverage that is commonly required by lenders when the borrower has a downpayment of less than 20 percent (20 %) of the purchase price. Typically there is a premium added to your monthly mortgage payment to cover the cost of this insurance. Since this additional payment is not required with HFA Preferred Risk Sharing™(No MI), the total monthly mortgage payment is typically lower than a loan with mortgage insurance included, even though the interest rate may be slightly higher.
HFA Preferred™(Lo MI)
With the HFA Preferred™(Lo MI) loan, mortgage insurance is provided by one of several private mortgage insurance companies when the borrower puts down less than 20 percent (20 %) towards the purchase of the home. Your lender will help you determine what the premium will cost for your specific situation.
The following eligibility requirements are shared by both the HFA Preferred Risk Sharing™(No MI) and the HFA Preferred™(Lo MI) loan programs:
- The household income cannot exceed the income limits. The gross annual household income for all adults that intend to occupy the home within one year from loan closing cannot exceed the limit shown for your county. All sources of income must be included, except for income received by persons under age 18 and income received by dependants enrolled in a full-time undergraduate program.
- The loan must be used towards the purchase or refinance of a primary residence.
- There is no first time homebuyer requirement under these programs. The borrower may have an ownership interest in another residential dwelling at the time of loan closing.
- Borrowers are required to put down at least $1,000 from their own funds. The remaining funds can be from an acceptable gift or assistance program.
- Pre-closing homebuyer education must be completed for home purchase loans by at least one borrower. Borrowers with a FICO score at or above 680 can complete this requirement at a PHFA-approved counseling agency or by completing the online education program offered by PHFA or Framework®. (Homebuyer education not required for refinance loans.)
- Face-to-face homebuyer education must be completed by all borrowers purchasing a home with a FICO score below 680 at a PHFA approved counseling agency.
- Acceptable credit history and the ability to make monthly payments on the home you expect to buy are required. Generally, you should plan to use no more than 30 percent (30 %) of your income for your monthly mortgage payment. A participating lender or PHFA network counseling agency can help you determine how much of a home you can afford, as well as any credit issues you may need to work on.
- Sufficient funds are necessary to pay standard mortgage application and closing fees. Check with a PHFA participating lender to determine the specific costs. These would commonly include such things as credit reports, appraisals, title fees, transfer taxes, etc.
- Sufficient funds for a downpayment on your prospective home are required. The minimum downpayment is determined by your credit profile, as specified above.
- Mortgage loans for two-unit properties are not permitted under these programs. Check out the Keystone Home and Keystone Government Loan programs if you are interested in purchasing one of these types of properties.
FHA Streamline Refinance
The FHA Streamline Refinance loan product allows eligible homeowners to refinance their existing FHA loan to reduce their current monthly mortgage payment. The new loan can only include the outstanding principal balance minus any applicable refund of the Upfront Front Mortgage Insurance Premium (UFMIP) plus the new UFMIP, up to a maximum amount of 97.75% of the original appraised value. Cash back to the borrower is not permitted. Any and all subordinate loans must be re-subordinated or paid off by the borrower; they cannot be paid off with the new loan. A copy of your repayment history verifying timely mortgage payments will be required.
VA Interest Rate Reduction Refinancing Loan (IRRRL)
The VA Interest Rate Reduction Refinancing Loan (IRRRL) allows eligible veteran-homeowners to refinance their existing VA-guaranteed loan to a lower interest rate and reduce their current monthly mortgage payment. The new loan can only include the existing VA loan balance, allowable fees and charges, up to two discount points, and the VA funding fee. Cash back to the borrower is not permitted. Any and all subordinate loans must be re-subordinated or paid off by the borrower; they cannot be paid off with the new loan.