New Law Expands WHEDA’s Ability to Refinance Homeowner Loans
Governor Walker yesterday signed into law a provision that allows Wisconsin Housing and Economic Development Authority (WHEDA) the ability to refinance the home mortgage loans that it has issued or services. WHEDA provides many first-time homeowners with low cost mortgage loans. While many homeowners have been able to take advantage of low interest rates over the last five years to lower their monthly mortgage payments, increase their disposable income and pay off their mortgages sooner, WHEDA-financed homeowners could not.
WHEDA was created in 1972 to provide an adequate supply of housing and encourage homeownership for persons and families of low and moderate income. Generally, under Section 234.59 (3) (e) of the Wisconsin Statutes, WHEDA is prohibited from making homeownership loans to refinance or acquire an existing mortgage loan. The only homeowner loans permitted to be refinanced by WHEDA were (i) construction loans, (ii) temporary bridge loans and (iii) loans to finance the rehabilitation of a home. The new law adds a fourth category, allowing WHEDA to refinance homeownership mortgage loans funded or serviced by WHEDA. The new WHEDA program, to be called Refi Advantage, will enable thousands of homeowners to take advantage of historically low interest rates, just as they have begun to rise again.
The Refi Advantage program will have some restrictions, so you will want to check the WHEDA website or with a banker before you apply. Homeowners must be current on their mortgage payments with a good payment history and an overall credit score of at least 660. They will also need to demonstrate at least 3 percent equity in their homes. No mortgage insurance is required.
Overall, this is a great program that received widespread support in the legislature, and will allow homeowners more flexibility when it comes to their finances.
To view a helpful FAQ on the Refi Advantage, click here.
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