An American family of four with $200 million in credit card debt could have to settle for buying a home in the suburbs.
They needn’t even apply for a mortgage to be able to purchase.
The Federal Housing Finance Agency (FHFA) said it is issuing an unprecedented series of loans that allow families to buy their own home.
The FHFA said it issued nearly $2.7 trillion in mortgage-backed securities in 2017, a record.
“This loan allows eligible households to buy, rent, or lease a home, in the U.S. or abroad, and refinance it for a lower payment rate,” the agency said in a statement.
It also allows families to refinance for lower interest rates on their existing mortgage.
In addition to refinancing, the FHAA said the new loans can help borrowers get off debt that has grown too high, while also helping to ease their monthly payments.
Under the new mortgage-based financing, borrowers who have the funds to pay their bills will be able, for example, refinance the interest-only mortgage they currently have for $1,000 a month.
The new loans are expected to help millions of people buy a home.
In 2017, the average price of a single-family home was $245,000.
The FHA said it has issued more than $200 billion in mortgage securities since the end of 2009.
The agency has said it hopes to issue a total of $400 billion in mortgages in 2021.
However, it has yet to decide whether to use the new lines of credit for other purposes.
Households would be eligible for the new mortgages if they have a household income of at least $75,000 per year and no more than five children under the age of 18.
For the average household, refinancing a mortgage for less than 10% of the original principal amount would cost an additional $400 a year.
Some of the new line of credit is available to families with $150,000 in household income, while others can be used to reforge mortgages that would normally require a down payment of $1 million or more.
Those with household incomes below that threshold can still refinance through the FHA’s new mortgage line of contact program.
There is no cap on the total number of loans eligible for refinancing.
The new lines-of-credit could also help millions more borrowers with mortgages.
One example of how the Fhfa’s new lines can help the average American is if borrowers are able to refortify their existing mortgages for a much lower interest rate than is currently required.
This could allow borrowers to buy homes that would otherwise be too expensive for most families.
But the Fhlafas new lines will also help many borrowers with credit card debts who have already defaulted on their credit card bills.
More: The Fhfas new mortgage loan refinancing program could help thousands of borrowers avoid foreclosure.