Considering Refinancing Your Mortgage? Rates can be even lower

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Mortgage refinancing deals may soon become more attractive.

Jim Lane / Getty Images

Combination lack of housing, the COVID-19 pandemic and historically low interest rates have created ideal conditions for homeowners. refinance your mortgages in many parts of the United States. And starting from August 1, refi prices can become even more pleasant.

Mortgage giants Fannie Mae and Freddie Mac said they will cut refinancing fees in an unfavorable market for all refinanced mortgages starting next month. The refinancing fee translates into a 0.5% fee on refinanced loans, or roughly $ 500 for every $ 100,000 borrowed.

The state fee was added to December 2020 to allow Fannie and Freddie to recoup some of the losses that government-funded lenders expected to suffer during the pandemic. In most cases, lenders would pass this commission onto borrowers, who could add thousands of dollars to refinancing. This move was seen as a way to counterbalance the losses to creditors after Care law posted federal ban foreclosures and provided homeowners with the opportunity to pause mortgage payments.

While it is not yet clear if the U.S. economy is on a solid footing – bursts of inflation worried some economists – the abolition of this fee is good news for homeowners looking to get refinancing.

From April to July 2020, when the pandemic was escalating, approximately 5% of Fannie and Freddie’s borrowers were registered in refusal of a mortgage programs. Since then, the figure has dropped to 2%, according to the FHFA. The agency said the success of its COVID-19 policy has lessened the impact of the pandemic on loans to Fannie and Freddie, ensuring that commission payments are stopped as soon as possible so that lenders can transfer savings to borrowers.

“The COVID-19 pandemic has financially exacerbated America’s affordable housing crisis. Removing refinancing fees in an unfavorable market will help families take advantage of low rates to save money, ”said Sandra L. Thompson, Acting Director of the Federal Housing Finance Agency. Press release… FHFA was established after the 2008 housing crisis and the agency acts as conservative mortgages Fannie and Freddie.

Some refinancing loans are already exempt from payment of fees, including homes worth $ 125,000 or less, homes refinanced through Fannie Mae Home Ready or Freddie Mac Home Possible programs, and government-backed mortgages, including FHA, VA and USDA loans. Large mortgages ranging from $ 510,400 to $ 765,000 were also exempt from tax in some regions.

“[The] The FHFA deserves credit for canceling this levy, ”said Mike Fratantoni, chief economist at the Mortgage Bankers’ Association. payment.”

In spite of falling interest rates Refinancing in July is down 60% from January, according to research by Black Knight. Analysts hope that the removal of duties will revive the housing market. “The recent cuts in mortgage rates, as well as the removal of fees, should give homeowners who have yet to refinance and save money the opportunity to do so now,” Fratantoni said.



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