Homeowners looking to refinance their conventional loan may be aware of a new refinancing fee to be imposed by the Federal Housing Finance Agency (FHFA). This fee was set to start in September, but will now be delayed. This is good news and provides a window of opportunity for many homeowners who still want to take advantage of the recent historic low mortgage rates.
Many industry groups and lawmakers were been quick to criticize the new fee, pleading that it’s inappropriate to make refinancing more costly during the COVID-19 pandemic. The added fee would seriously impact certain borrowers eager to take advantage of historically low mortgage rates. More importantly, the fee came without advance notice which posed issues for many borrowers that have current refinance transactions in process.
In a recent announcement, Fannie Mae and Freddie Mac said this new 0.5% mortgage refinance fee won’t be implemented now until December 1st. Homeowners with loan amounts below $125,000 are exempt from the fee altogether.
According to the Mortgage Banking Association, the new fee will add approx $500 per $100,000 borrowed. The average consumer will be paying $1,400 more than they otherwise would have paid.
Please note: the new fee only impacts Conventional loan refinance transactions, both cash-out, and no-cash out refinances. All purchase loans and Government home loans are unaffected.
In a statement, the FHFA defended the fee, saying it’s needed to cover COVID-related losses for Fannie Mae and Freddie Mac that are projected to reach at least $6 billion. The companies, which have been under the government’s control since the 2008 financial crisis, have pursued several costly actions during the economic slowdown to keep renters and homeowners in their residences, the agency said.
So if you are a homeowner that is still thinking about refinancing, now is the time! Borrowers should remember that refinance transactions with all lenders are currently taking longer to close due to high volume. Regardless of your current mortgage servicer, Coast 2 Coast can help! It’s important to have your file in process no later than October 15th to avoid the new fee.
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