If you wish to save money by refinancing your home – then it’s time.
There are plenty of reasons to refinance, but avoiding an inbound Fannie Mae and Freddie Mac refinancing fee is now at the top of the list. The mortgage companies are starting to charge one Unfavorable market refinancing fee on December 1, 2020. The new fee, originally scheduled to begin on September 1, adds a 0.5% fee to all refinancing loans. The 5% fee is equal to 50 basis points.
If you are ready to refinance, here is what you need to know about the upcoming fee. Plus, how to completely avoid fees to lower your monthly payment, reduce your current mortgage costs and secure record low refinancing rates.
Fannie Mae and Freddie Mac’s new fee
Fannie Mae and Freddie Mac announced the additional fee to protect against potential losses on any mortgage financing they guarantee.
“In light of the market and financial uncertainty that results in higher risk and costs incurred by Fannie Mae, we are implementing a new price adjustment at the loan level, Fannie Mae explained in a loan letter.
To avoid paying this new fee, get off to a good start with your mortgage refinancing through the multi-lender market Credible today. With Credible’s free online tools, you can complete the entire origination process from comparing mortgage rates to closing. Start the process now.
Here are some important things you need to know about the extra fee:
- Refinancing loans for less than $ 125,000 are exempt from the additional fee.
- This fee is in addition to other price adjustments and fees associated with refinancing.
- Fannie Mae and Freddie Mac adjusted the rollout date to December 1st.
The good news: You have a little extra time to take advantage of lower rates at no extra charge so you can reach your financial goals. If you are ready to refinance, use Credible to review mortgage lenders and compare loan rates without affecting your credit score.
How to get lower loan rates at no extra charge
If you are a homeowner considering one refinancing of mortgage, you may want to decide quickly. Any loans purchased by Fannie Mae and Freddie Mac after December 1st incur the additional fee. It can take several weeks or months to process an application for refinancing your home, so when you start now, you will have the best chance of refinancing your mortgage for less money.
To increase your chances of obtaining the lowest refinancing rates, be sure to compare mortgage lenders. Fortunately, there are free online tools available that make it easy to refinance your mortgage. By entering some simple information you can pre-qualify in minutes.
While 0.5 percent may not sound like much, it can add up to several thousand dollars depending on the size of your loan.
For example: A $ 250,000 refinancing will cost an additional $ 1,250, and a refinancing on a $ 400,000 loan will cost an additional $ 2,000. You can roll the fee into your new loan. Use one to get specific numbers for your situation online mortgage calculator to determine new monthly costs and see if it makes sense to refinance.
Maximize your savings by comparing home equity loan refinancing rates. A tool like Credible can help you review fees, rates and loan terms in one place.
What are today’s mortgage rates?
At the time of publication, the average interest rate for a 30-year fixed-rate loan is 2.9%. The average 15-year fixed interest rate is 2.4%. The rates for both the 30-year fast and the 15-year fast are significantly lower than the same time last year.
Today, it may be easier to catch a lower interest rate (the interest rate is on unprecedented downturns). If you are considering refinancing, act now. You can research multiple lenders and become pre-qualified for refinancing rates using online tools. Get loan estimates now via credible.
Again, a loan calculator can help you crush the numbers to determine if the cost of refinancing is worth it. There are many reasons to refinance, but it is probably among your biggest financial goals to lower your monthly payments and chip away at your loan balance. Using refinancing calculators can give you a better idea if it makes sense.
What happens when you refinance your mortgage?
Refinancing your mortgage can save you money on your monthly payments and the total cost of your current loan. When you apply for refinancing, you apply for a new loan.
A refinance pays off your current home loan and starts a new home loan with different terms. Many people choose a mortgage loan to reduce their interest rate, but you can also change your repayment terms and switch mortgage lenders.
How do you refinance your mortgage?
When it comes to refinancing your mortgage, simply submit an application.
You can apply via credible. All you have to do is share some simple personal information about you and your home (like your loan balance) to get accurate pre-qualified interest rates with no impact on your credit score. Click here to see refinancing rates and cost allocation for each loan.
Note: The best candidates have a healthy credit score (you need a score of at least 620, but a higher score qualifies you for lower rates). To maximize savings on a mortgage, aim to reduce your interest rate by at least one full percentage point. Refinancing your existing mortgage can help you save money if you plan to stay in your home for at least five years.
Before applying for a mortgage refinance, take the time to do the following:
- Review your credit report and correct any errors
- Prepare your home for an appraisal (your lender will have an updated property value)
- Compare rates and loan terms from multiple lenders
- Check your numbers to determine if refinancing your home will save you money (divide your savings by the cost of fees and closing costs to determine how long it takes to break even).
In addition to the unfavorable market reimbursement fee, your lender is likely to charge a fee closing costsfees for origin loans and assessment fees. If you have questions about mortgage refinancing, you can always use Credible to get in touch with experienced lenders.
Refinancing your mortgage can help you save money every month, but you probably need to act now. While refinancing rates are expected to be low through 2023, your home loan may cost you more if you wait to apply.
If you have further questions about the cost of refinancing or the process, you may want to consider contacting a financial advisor.
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