How New Mortgage Refinancing Fee Affects Homeowners
Q: Should I refinance now or wait for lower rates? Mark, Babylon, NY
A: Fannie Mae and Freddie Mac are adding an additional .5% fee on most mortgage refinance loans that will raise costs for borrowers who refinance to take advantage of historically low rates.
The mortgage giants claim that the new 0.5% fee is intended to mitigate their risk associated with projected losses due to the Covid-19 pandemic.
Fannie and Freddie don’t originate loans, instead they buy mortgage loans from lenders, then wrap them into securities and guarantee the repayment of principal and interest to investors who buy the securities.
The Mortgage Bankers Association, said the fee would raise costs for the typical borrower by $1,400. To avoid the new fee, you’ll have to finalize your refinance before it kicks in, however, fee or no fee, mortgage rates are still at historic lows. Thanks for your question, Mark.
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