What is DU Refi Plus™?
DU Refi Plus™ was designed to light a flame into the mortgage industry by simplifying the refinance process for millions of Americans. With underwriting guidelines that include lower acceptable credit scores, decreased income documentation and even appraisals being waived in certain situations, Fannie Mae allows homeowners to refinance up to 105% (loan-to-value or LTV) of the current appraised value of their homes.
Among the other significant changes include Fannie Mae accepting credit scores below the current 580 requirements, as well as borrowers only having to submit one current pay stub. The goal of Fannie Mae’s DU Refi Plus™ is to assist homeowners to avoid foreclosure and remain in their homes by refinancing into a lower mortgage rate and ultimately decreasing their monthly mortgage payment. The most significant element within DU Refi Plus allows homeowners to refinance, even if the value of their home is less than they currently owe on their existing mortgage. Combined with low current interest rates, borrowers can anticipate lower principal and interest payment each month.
DU Refi Plus™ benefits include:
- All property types are eligible for refinancing, including co-ops, condos, manufactured homes and Planned Unit Developments(PUDs).
- Primary residences and investment properties are eligible for up to 4 units.
- Second homes are only eligible for 1-unit properties.
- Maximum LTV is 105%.
- No maximum CLTV/HCLTV.
- The minimum credit score of 580 is NOT required on any DU Refi Plus™ loan.
- The minimum credit score of 680 is NOT required on high-balance ARMs.
- One current pay stub and verification of employment (VOE) will be required for employees receiving salaries.
- One-year of federal tax returns are required for self-employed and commissioned borrowers.
- Debt-to-Income (DTI) is determined by DU.
- MI is not required on loans with an LTV over 80% if the existing mortgage does not already have MI.
- Project reviews for condos, co-ops, and PUDs are NOT required.
- Properties that have previously been limited to 75% LTV/CLTV/HCLTV will now be eligible to 80% LTV/CLTV/HCLTV (including 2-unit primary residences with a high-balance loan, investment properties, second home co-ops and any 3- to 4-unit primary residences, second-home co-ops and investment properties.
Downsides of DU Refi Plus™
DU Refi Plus™ outweigh the restrictions, however, here are some of the restrictions:
- No cash-out refinances
- No new subordinate financing (HELOCs or HELOANS)
- Existing HELOCs or HELOANs must be re-subordinated
- Cannot pay off existing subordinate financing (no cash-out only)
- No ARMs with fixed terms less than 5 years
- No balloon mortgages
- No interest-only mortgages
- No Texas 50(a)(6) mortgages
- No MyCommunityMortgage (MCM) mortgages
- No HomeStyle Renovation mortgages