Can You Refinance a CHFA Loan?

In the early 1970s The Colorado General Assembly took steps to make housing more affordable for Colorado residents who otherwise couldn’t secure a home or mortgage. In 1973, those steps became the Colorado Housing and Financing Authority (CHFA). Since its inception in 1973 CHFA has helped thousands of home and business owners purchase homes or property without drowning in debt in the form of affordable housing or financial assistance programs.

If you’re a first time homebuyer in Colorado you should always talk to your real estate agent and home loan agent about qualifying CHFA loans but what if you already have a CHFA mortgage and need to refinance? Are there penalties or fees associated with getting out of a CHFA loan? Let’s figure out refinance options on CHFA loans and other steps you can take to make your CHFA mortgage more manageable.

Can You Refinance a CHFA Loan?

Rules on CHFA Loan Refinance

As of March 2, 2020, CHFA no longer offers refinance options for their loans. CHFA previously offered two refinance options in the FHA Streamline Refinance Program and Preferred Refinance Program but those are no longer options as CHFA pivots in its role for Colorado homeowners. Any homeowner who started the HomeConnection refinance options before March 2 will not be affected.

According to CHFA if a borrower that currently has a CHFA-qualified second mortgage wishes to refinance, they will have to pay back their second mortgage loan back to CHFA in full. As of March 2, CHFA will also no longer provide an option to subordinate the CHFA Second Mortgage Loan.

Refinancing Options for CHFA Loans

CHFA no longer offers refinancing options within the CHFA program but there are some options for CHFA loan owners in other mortgages and mortgage lenders. The primary purpose of CHFA is to allow homeowners who would otherwise not qualify for a home to become homeowners but these programs also help create equity, boost credit scores, and in some instances allow homeowners to save money they would otherwise be pouring into a mortgage, mortgage insurance, and other fees.

All these qualities can turn a family who wouldn’t have qualified for a conventional loan a few years ago into a healthy candidate for a non-CHFA loan and their current interest rates. The best way for CHFA loan owners to figure out refinancing is by meeting with a CHFA participating lender.

Meeting with Participating Lenders

Participating lenders are mortgage companies and lenders that are accredited to qualify and give out CHFA loans to potential homeowners. Most of these participating lenders offer more loan programs than CHFA and will work with you to get you into the best possible mortgage whether that’s a first-time mortgage or refinance.

If you need to refinance your CHFA loan, it’s recommended to call one of these participating lenders and preferably the one you used to qualify and obtain your original CHFA loan. Your lender can look over your current CHFA program, what it would take to pull yourself from the program, and options for refinancing moving forward.

Note: Not all homeowners can jump ship from their CHFA loan without making concessions, paying off previous mortgages, or taking other steps to properly refinance their loan. For some homeowners, the paperwork and bulk payments are worth it to refinance into current rock bottom mortgage rates. Your ability to refinance a CHFA loan depends on the current program you’re enrolled in, options from lenders, and other qualifying factors like yearly income.

All these qualities can turn a family who wouldn’t have qualified for a conventional loan a few years ago into a healthy candidate for a non-CHFA loan and their current interest rates. The best way for CHFA loan owners to figure out refinancing is by meeting with a CHFA participating lender.

The Mistakes of Refinancing CHFA Loans

Most CHFA homeowners wish to refinance to qualify for lower mortgage rates and leave the extra tasks and paperwork that come with a CHFA loan but that might not be the best idea even with low interest rates. Before attempting to pull out of your CHFA loan, always talk with your lender to be sure you’re doing the right thing.

For many homeowners, trying to refinance a CHFA loan doesn’t make much financial sense. CHFA loans by default are built with some of the lowest mortgage interest rates on the market and other factors to keep CHFA loan owners financially safe and sound.

Lower interest rates are undoubtedly appealing, but after closing costs and other fees you might not be as better off as you previously thought. Again, the best information for refinancing or modifying your current CHFA loan can be found at a participating lender.

More Resources on Refinancing CHFA Loan

So, can you refinance a CHFA loan? As of March 2, 2020, both of CHFA’s refinancing programs will be discontinued but that doesn’t mean there aren’t options to get you into a better loan. To explore your options, visit the CHFA website, talk to a CHFA representative and most importantly start a dialog with a CHFA participating lender. Communicate with as many experts as possible, keep your options open, and when in doubt keep your current mortgage. The real estate market is ripe for refinancing but only if you take the right steps.