Fannie Mae and Freddie Mac both dropped a bombshell yesterday. The FHFA, Fannie and Freddie’s regulator, is imposing a new 0.5% of the loan amount fee to all refinances effective September 1st. Almost all lenders will start collecting this new higher rate immediately because it will take until after September 1st to deliver the loan to Fannie and Freddie.
According to a CNBC.com article, “This announcement is bad for our nation’s homeowners and the nascent economic recovery,” wrote Bob Broeksmit, CEO of the Mortgage Bankers Association, in a statement. “Requiring Fannie Mae and Freddie Mac to charge a 0.5% fee on refinancing mortgages they purchase will raise interest rates on families trying to make ends meet in these challenging times.”
So what does that really mean to you as a refinance borrower? For a $300000 loan, the new refinance fees will cost you roughly $1500. Most lenders will incorporate the new fee into the interest rate which will result in roughly 0.125% to 0.25% higher interest rates.
Supposedly this new fee is being imposed to cover additional risks brought by the downturn in the economy. Fannie and Freddie are assuming that we will see higher default rates in the coming months.
Don’t let this discourage you though, interest rates are still at record lows and if you would like to know how much you can save, the Richard Woodward Mortgage Team would be happy to prepare a custom analysis’s of your scenario and provide you several options to save money and lower your payments.
Purchase transactions are not being affected so it is a great time to upgrade your home and take advantage of record low-interest rates. We are here to help with any mortgage scenario you might have questions about.
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Service First Mortgage NMLS 166487 6800 Weiskopf Ave #200, McKinney, TX 75070
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration, AZ 0924237, CO, FL MLD1342, KY MC358087, OH SM.501988.000, OK ML01483. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualifications. Rates and fees are subject to change without notice.