If you are considering mortgage refinancing, the rates could be even lower


Mortgage refinancing operations can quickly become attractive.

Jim Lane / Getty

The combination of the housing shortage, the COVID-19 pandemic, and historically low interest rates have created the perfect conditions for homeowners to refinance their mortgages in many parts of the United States. And after August 1, refi trading could be even softer.

Mortgage giants Fannie Mae and Freddie Mac have said they will lower fees for refinancing in unfavorable markets for everyone. Mortgage refinancing from next month. The refinancing fee translates to 0.5% of your refinance loan, or about $ 500 for every $ 100,000 you borrow.

Government fees added in December 2020 to allow Fannie Mae and Freddie May to recoup some of the losses they expected to incur from government-backed lenders during the COVID-19 pandemic. In most cases, the lender will pass these costs on to the borrower and may add thousands of dollars to the refinance. This decision was seen as a way to compensate for the subsequent losses of the lenders. Coronavirus support law Investment Federal ban Foreclosure and option offers to homeowners Suspend payment of their mortgage.

It is not clear whether the US economy is still on a solid footing. Rising inflation Some economists are worried. Eliminating these fees is good news for homeowners considering refinancing.

From April to July 2020, when the pandemic broke, about 5% of borrowers Fannie Mae and Freddie May borrowers Mortgage Tolerance Program. According to data from the FHFA, it has fallen to 2% since then. The agency said the success of the COVID-19 policy ensured that the impact of the pandemic on Fannie Mae and Freddie May’s loans would be mitigated and the fees would be terminated sooner so lenders could pass their savings on to borrowers. ..

“The COVID-19 pandemic has financially exacerbated the affordable housing crisis in the United States. Eliminating unfavorable market refinancing fees helps families take advantage of the low interest rate environment to save more money. It would, ”said Sandra L. Thompson, director of the Federal Housing Finance Agency. Press release .. The FHFA was created following the housing crisis of 2008, and the government agencies Guardian Fannie Mae and Freddie May Mortgages.

Some refinance loans are already fee-free, such as homes under $ 125,000, homes refinanced through Fannie Mae or Freddie Mac’s Home Possible program, and government-sponsored mortgages. FHA, VA and USDA loan. In some areas, jumbo mortgages of $ 510,400 to $ 765,000 have also been exempt.

Refinancing rate Apart from 10-year fixed rate loans, it will continue to decline in July. The FHFA said it would continue to monitor the housing finance system and make necessary adjustments.

If you are considering mortgage refinancing, the rates could drop even more Source link If you are considering mortgage refinancing, the rates could fall even more

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