Your clients who are refinancing their mortgages now will need to factor in the new adverse market refinance fee that kicked in on December 1, 2020.
The 0.5% charge applies to conventional loans sold to Fannie Mae and Freddie Mac, and it was put in place to cover projected COVID-19 losses. According to the Mortgage Bankers Association, the fee means the average consumer will be paying $1,400 more than they otherwise would have paid.
Since many homeowners may be focused solely on chasing the lowest interest rate, give them a heads-up about the change. Others may not know about or forget to include the new fee in their financial calculations.
If they’re refinancing mortgages of $125,000 or less, the fee doesn’t apply.
Your clients also could get around the fee if they qualify for VA or FHA loans, which aren’t affected, or if they or fit the guidelines for refinancing with Fannie Mae’s HomeReady or Freddie Mac’s Home Possible mortgage programs.
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