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Eliminating unfavorable mortgage refinancing costs is ‘good news for homeowners,’ says expert – here’s why:



Eliminating unfavorable mortgage refinancing costs is 'good news for homeowners,' says expert - here's why:

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The Biden administration’s removal of the market’s unfavorable refinancing fee makes refinancing a mortgage more beneficial than ever for homeowners. (iStock)

Many homeowners recently received an incentive to refinance their mortgages, following President Joe Biden’s administration on Friday removed the controversial adverse market refinancing fee, which was added in 2020 and added to refinanced mortgages backed by government-backed corporations (GSEs) Fannie Mae and Freddie Mac.

The 0.5% fee was introduced during the coronavirus pandemic to ease the financial burden faced by the GSEs. Both companies have policies in place to help homeowners who are having trouble paying their mortgage. But after August 1, 2021, that fee will cease to exist and more homeowners will be able to save money by refinancing their mortgages.

With mortgage interest below 3% and near all-time lows and the refinancing fee removed, homeowners could save hundreds of dollars by taking advantage of the low interest rate environment and refinancing their mortgage. Visit Credible to get started today before the rates start to rise and see how much you can save.


How much do homeowners save?

The Federal Housing Finance Agency (FHFA) stated in early August that it would do away with the unfavorable market refinancing fee, but many homeowners could see the savings by refinancing now. That is because it takes an average of 35 days to close on a mortgage refinance, by which time August 1, 2021 has already passed and homeowners won’t have to pay the extra fee.

“Friday’s announcement by the FHFA is great news for homeowners,” said Credible Chief Revenue Officer Robert Humann. “This is a sign of a recovering economy and optimism from GSEs that the worst of the pandemic is behind us.”

On average, homeowners looking to refinance their home save about $1,400 with the removal of the fee, according to a statement from the Mortgage Bankers Association (MBA) in August 2020. At the time, the company described the fee as an “ill-timed, misguided guideline”.

“After Friday’s announcement, interest rates fell to their lowest point in five months, which is even better news for homeowners looking to refinance,” Humann said.

Interest Rates for a 30-Year Fixed Rate Mortgage dropped to 2.88% in the latest weekly Freddie Mac Primary Mortgage Market Survey. With interest rates dropping and the refinancing fee gone, homeowners who didn’t buy until 2019 or even early 2020 can get a lower interest rate and save hundreds on their monthly payment by refinancing. Visit an online marketplace like Credible to use a mortgage calculator and find out how much you can save.


Homeowners are now reaping the benefits

The FHFA was able to announce an early fee cut, the agency said, due to improved market conditions and a change in its priority agenda.

“MBA Applauds [FHFA] Acting Director Sandra Thompson’s decision to eliminate the adverse market refinancing fee,” MBA CEO Bob Broeksmit said in a statement:. “We have called on FHFA to revoke this policy and appreciate that they have reviewed the data and responded to our request. With less than 2% of GSE loans in foreclosure and continued house price increases resulting in significant equity, it is not necessary for the fee.”

Now that the fee is gone, homeowners see the most benefit. Months, if not years, will be shaved off the breakeven point timeline for potential borrowers looking to refinance, Credible explained.

See how you can take advantage of the fee elimination by visiting Credible and comparing mortgage refinancing loans from multiple lenders at once. Check out the online marketplace and get pre-approved in minutes without affecting your credit score.


How can refinancing a mortgage save me money?

  • Reducing monthly payments: Refinancing your mortgage can save you money on your monthly payments by lowering your interest rate, and therefore the total amount you pay each month. The removal of the unfavorable mortgage refinancing costs simply means that there are no additional costs to refinance and take advantage of historically low interest rates.
  • Cash-out refinance options: With house prices soaring to record highs, taking out a payout refinancing is also a viable option. Consider removing equity in your home to consolidate high-interest debt and eliminate other payments.
  • Changes to your loan term: With a refinancing, you can change the conditions of your loan. This includes lowering your interest rate, but can also include things like doing away with mortgage insurance, switching from an FHA mortgage to a conventional mortgage, extending or shortening the term of your loan or adjusting it to a fixed rate or adjustable rate. A lender can walk you through these options and show you how to save money through each option.

Are you curious about the options available to you? contact Credible to speak to a mortgage expert and get all your questions answered.

Do you have a financial question, but don’t know who to ask it? Email The Credible Money Expert at: [email protected] and your question can be answered by Credible in our Money Expert column.

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