Rate & Term Refinance: Lower Your Monthly Payment & Lock in a Better Rate

Credit requirements depend on the loan program and underwriting method. For a manually underwritten Fannie Mae conventional loan, the minimum is generally:

• 620 for a fixed-rate mortgage
• 640 for an adjustable-rate mortgage

The new mortgage payment and the borrower’s other monthly debts must fit within the applicable debt-to-income limits. Fannie Mae generally allows:

• Up to 36% DTI for manually underwritten loans
• Up to 45% with qualifying credit and reserves
• Up to 50% for loans approved through Desktop Underwriter

At Austin Capital Mortgage, we allow upto 54% DTI.

The lender will review the borrower’s payment history on the existing mortgage and other debts.

Recent late mortgage payments, foreclosure, bankruptcy or other major credit events can affect eligibility.

The new loan may generally be used to:

• Pay off the existing first mortgage
• Change the interest rate or loan term
• Switch from an adjustable-rate to a fixed-rate mortgage
• Finance eligible closing costs, discount points and prepaid expenses
• Pay off a purchase-money second mortgage
• Buy out another property owner under an eligible written agreement

A second mortgage that was not used to purchase the property generally cannot be paid off through a conventional rate-and-term refinance; doing so may cause the transaction to be classified as a cash-out refinance.