As interest rates drop to record lows, we have seen a surge in mortgage refinance inquiries even though we are in the midst of a global pandemic. With the instability of employment weighing on our communities, there is no question that people are motivated to keep a little more money in their pockets each month with these record low interest rates. If you have been in contact with your local lender you probably sensed the urgency behind our varied forms of communication!
This is due to the recent news, Fannie Mae and Freddie Mac will be charging higher fees to all lenders, a 0.5% fee which equates to $1,400 on the average mortgage. This fee is essentially there to cover Fannie & Freddie’s $6 billion in losses caused by COVID-19. There are some exceptions though. Any loan balance below $125,000 as well as any loans through Fannie Mae’s HomeReady and Freddie Mac’s Home Possible affordable refinance programs are exempt from this fee. Fannie Mae and Freddie Mac had originally announced that this “adverse market” fee was to begin September 15th, now they will wait until December 1st to enforce the fee. While the fee may be a bit of a barrier that impact lender’s rates, the overall low interest rates have softened the blow. Even with the added unpredictability of the market, now is as great a time as ever to act!