The Federal Housing Finance Agency eliminated something called the “Adverse Market Refinance Fee,” a huge incentive for homeowners looking to refinance their mortgage.
The refinancing fee was rolled out in December as a way to pay for some of the COVID mortgage relief. How it worked was, the agency calculated the fee by taking 0.5% of a loan’s balance and adding that to refinance costs. To allow families to save more money, lenders will no longer be required to pay Fannie Mae and Freddie Mac a 50-basis point fee when they deliver refinanced mortgages.The FHFA said the fee and other policies put in place for the pandemic were effective enough to warrant an early conclusion of this fee.
FHFA’s expectation is that those lenders who were charging borrowers the fee will pass cost savings back to borrowers. Santa Claus has come early for Texas homeowners looking to refinance their mortgages. The fee, frequently meant that borrowers’ rates were often one-eighth of a percentage point higher than they otherwise might be. In actual dollar terms, the effect is relatively small but not insignificant for some — around $20 per month for a $300,000 loan.
The justification for the fee when it was sprung on the market was that it was necessary to pay for the costs of forbearance and pandemic-related payment relief incurred by Fannie Mae and Freddie Mac. But the homeowners punished were those that weren’t high risk, didn’t have the need for forbearance payment relief and were in fact reducing their risk to the mortgage finance marketplace by reducing their rate and monthly payments.
If you are still a candidate for refinancing, the timing doesn’t get any better than right now. Rates are still at historically low rates and now the the adverse market refinance fee has been eliminated. Call Lone Star Financing today and let us help provide you a mortgage refinance free good faith estimate so you can compare costs and saving and let us help you decide if refinancing is right for you.