What's Up Wednesday- August 19, 2020
What's Up Wednesday - 8/19/2020- What does the new Freddie and Fannie refinance fee mean for homeowners?
**UPDATE: The Federal Housing Finance Agency has agreed to delay the implementation of the loan refinance fee until Dec. 1, 2020. The FHFA also announced that low-balance refinances are exempt. Homeowners refinancing mortgage loans with balances below $125,000 will not be charged the new fee. Borrowers with Home Ready and Home Possible program loans are also exempt. If you do not want to sell or cannot sell this year, we encourage you to explore your refinance options before December 1, 2020 to take advantage of historically low rates and to avoid this fee. If you are not planning on staying in your home for the next 3-5 years and want to seize the opportunity to sell your home for a high sales price in our current low inventory, high demand seller's market, reach out so we can do a Right Price Analysis on your home and provide you with an estimate of your proceeds. **
Last week, Fannie Mae and Freddie Mac announced that they will start charging a 0.5% "adverse market fee" on all refinances starting September 1st. This fee will apply to any Fannie or Freddie backed refinance loan.
In a notice to lenders, Freddie Mac said the fee is "a result of risk management and loss forecasting precipitated by Covid-19 related economic and market uncertainty." The last time Fannie and Freddie announced a fee like this was in 2007 when they introduced a 0.25% charge on all mortgages at the beginning of the financial crisis.
What this means for current homeowners is that it will now cost them more to refinance. For example, for a home worth $500,000 with 20% down, a refinance will now cost an additional $2,000.
If you are trying to figure out if you should refinance, sell, or stay put and want expert guidance through all of your options, please reach out for a complimentary consultation with one of our Residential Specialists.
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