Fannie Mae is making it clear that they are trying to decrease their presence in the mortgage industry. One of the ways they are doing so is by increasing the fees they charge lenders to guarantee the mortgage loan. According to an FHA spokesman the fees are set to rise 14 basis points in March or April of next year. Homeowners can expect to see the same increase in 30 year mortgage interest rates. Even if rates were to stay at the levels they are today consumers will see a rate increase as lenders pass along the additional fee to homeowners.
In addition to increasing the fee for everyone, Fannie Mae is also charging additional fees in states that make it harder to foreclose on properties. This includes New Jersey, Florida, New York, and Connecticut. On top of this, they have a third fee structure that will be implemented. This will increase the fee for loans given to borrowers with low credit scores. All in all, this will be a bad deal for consumers. If you want to refinance do it now, before these fee changes take place. The closer it gets to March lenders will start taking proactive steps to protect themselves by increasing interest rates.
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Fannie Mae and Freddie Mac currently back around 60% of the mortgage loans in the U.S. Existing mortgages will not be impacted by these fee changes but if a homeowner wants to refinance, it will. A solution is obtaining an FHA home loan instead.
The only positive change coming out of the Fannie Mae fee changes is that they will no longer be charging an upfront 25 basis point fee. This was put in place to protect the companies against the high risk housing market. Since the housing market has improved,they will only be charging this fee in four high risk states going forward.
Interestingly Fannie Mae and Freddie Mac took bailout funds in 2008 in the amount of $187.5 billion. They were almost insolvent when they took tax payer funds. Now, five years later, they are profitable again and will have paid back over $185 billion by year end 2013. In other words,the tax payers saved them from failure in 2008,then homeowners paid their mortgages and helped them to generate enough of a profit to make money and pay back the loan. Now that they are in the black again they are passing along the benefits of this generous gesture by raising fees on their mortgage loans. Fortunately homeowners have a choice and can refinance or buy a home using an FHA loan instead. Remember, loans refinanced now will not be impacted by these rate increases. Just don’t wait until the last minute,or you will be dealing with higher interest rates.
For more information on how much you can save by refinancing or to compare FHA loans with mortgages backed by Fannie Mae contact your local mortgage lender.
