Q: What is the purpose of this fee?
- A: The Federal Housing Finance Agency (FHFA) announced that qualifying refinance transactions sold to Fannie Mae and Freddie Mac will be charged a 0.5% fee in order to recover from COVID-19 losses.
Q: Why is the fee showing up on October 9, 2020 if the official statement from the FHFA says it won’t go into effect until December 1, 2020?
- A: While this fee doesn’t officially begin until December 1, 2020, you will be seeing it reflected in rates and costs now. On average, loans are taking approximately 20 days to close, meaning that even if you started the process now, the fee would eventually hit your loan along the way.
Q: Who does this apply to?
- A: Any conventional refinance transaction with a loan balance of $125,000 or more will be affected by this fee. Various affordable refinance products including Home Ready, Home Possible and VA loans will be exempt from the fee.
Q: How is this fee going to be expressed in my transaction?
- A: Like most lenders across the nation, Garden State Home Loans is working this fee into our rates.
Q: Is it still a smart move to refinance right now?
- A: Absolutely. While interest rates will be slightly higher than they have been, they are still much lower than we’ve seen over the past few years. There’s no reason to wait!
As always, please do not hesitate to reach out to us with any additional questions regarding this fee!