As if a housing shortage and historically low interest rates weren’t enough to spark some of your clients to consider refinancing instead of buying, the Federal Housing Finance Agency (FHFA) just put another log on the fire.

This week, Fannie Mae and Freddie Mac have agreed to eliminate the “Adverse Market Refinance Fee” for all refinanced mortgages, effective Aug. 1. The refinancing fee was implemented in December 2020 to help pay for some of the federal pandemic-related mortgage relief.  

This change is big news for clients on the fence about refinancing. The additional refinancing fee had been calculated by taking 0.5% of a loan’s balance and adding that to refinance costs. That means new refinancers will now save roughly $500 in fees for every $100,000 borrowed.

In terms of borrowers’ rates, clients could now be about a one-eighth of a percentage point lower than they otherwise might be. That translates into around $20 per month for a $300,000 loan. Refinancing just got cheaper. 

“Eliminating the Adverse Market Refinance Fee will help families take advantage of the low-rate environment to save more money,” said Acting Director Sandra L. Thompson in a FHFA news release announcing the move.

To help your clients learn more about whether refinancing is best for them, recommend that they get in touch with us to discuss all their options.

*A cash-out refinance increases your mortgage debt and reduces equity you may have in your home. Your monthly mortgage payment may be higher.

SOURCES

Get Started Here: FHFA Eliminates Adverse Market Refinance Fee | Federal Housing Finance Agency. (n.d.). https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Eliminates-Adverse-Market-Refinance-Fee.aspx.