What you need to know about the new FHFA refinance fee
Here’s a look at the latest developments in the mortgage market for the week beginning 8/19/20.
- New FHFA fee will raise the cost of refinancing
- Knowing the difference between APR and interest rate can save you money
- Homebuilder confidence hits 32-year high
- Real Simple awards Better.com for simplest loan experience
New FHFA fee will raise the cost of refinancing
In light of market uncertainty due to COVID-19, the Federal Housing Finance Agency (FHFA) introduced a new 0.5% fee on all mortgage refinances, which will cost the average borrower an extra $1,400 over the life of the loan. Homeowners who locked in a rate before the FHFA’s announcement on August 12th, 2020 won’t be impacted by the change, but the fee will be applied to most loans with rates locked after that date. This only applies to refinancing and doesn’t include loans for home purchases.
Citing increased risk brought on by the pandemic and recent economic woes, the FHFA approved the 0.5% fee to mitigate potential losses. However, there’s discussion about whether the FHFA is attempting to increase profits for government-sponsored entities like Fannie Mae and Freddie Mac during a record-breaking mortgage market.
Many within the mortgage industry have criticized the move, calling it a surprise fee that conflicts with the federal government’s goal of supporting American homeowners. A senior White House official questioned the decision, promising to review it, while the Mortgage Bankers Association released a letter calling for the FHFA to withdraw the fee immediately.
While the new fee makes refinancing more expensive, mortgage holders should continue to check rates for themselves. Refinancing at a rate of .75 points lower would still reduce the monthly payment on most mortgages, leaving many homeowners in a position to save despite the additional cost.
Knowing the difference between APR and interest rate can save you money
Ever mix up the meaning of annual percentage rate (APR) and interest rate? You’re not alone. While both terms are displayed as percentages, each represents a different aspect of your mortgage payment.
Having a clear understanding between the two will help give you a better idea of the complete cost of your home loan. Get a detailed breakdown of APR and interest rates from our team of experts and be prepared during your next home or refinance decision.
Homebuilder confidence hits 32-year high
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) reported this week that homebuilders’ confidence in the market is the highest it’s been since 1988.
A perfect storm of high demand and low supply, particularly in suburban and rural areas, may be responsible for the industry’s optimism. The imbalance has created a massive opportunity for new home construction.
Real Simple awards Better.com for simplest loan experience
Real Simple recognized Better.com as the best digital platform for navigating the home loan process with ease. A panel of judges highlighted the user-friendly mortgage application and suite of expert services among the reasons why Better.com earned their pick among the 2020 Real Simple Smart Money Award winners.
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