Junaid Raza Syed (Senior Editor/Department Manager FS)
If you take your mortgage seriously, you probably keep up-to-date with the latest in the sector. And if you do, you’ve most likely heard of the new fee applied to mortgage refinancing.
Now calm down. We know you’re feeling desperate and may want to search for an alternative plan, but before you do so, just hear us out. Mortgage refinancing may still be one of the best options currently on the table, despite that fee.
Let us show you how.
Unsplash | Despite the new fee on mortgage refinancing, it’s still a great deal
Let’s talk numbers ‘coz numbers never lie
According to NerdWallet’s daily survey, the 30-year fixed-rate mortgage interest slab was stable at around 3% during early August this year, but it has fallen below that level in the 15-year fixed-rate loan. This tiny change has resulted in increased applications for refinancing by a whopping 60%!
Basically, it’s estimated that the people who resorted to refinancing have reduced the monthly interest they pay by 0.75%. The money that can be saved from this step is approximately $300 per month, which we believe is an excellent deal.
Read – Working at home can help save €28,000 on mortgage
So should you be afraid of the new fee?
You decide! Okay, okay, we’ll help. Check out these critical things.
- The fee was applied on August 12 by Fannie Mae and Freddie Mac, which refinanced 47% of mortgages in 2020.
- The fee is 0.5% and applies to conventional refinances only. Since the average mortgage in August was $324,000, the estimated fee is approximately $1,620.
- If your mortgage falls under government home loans, you won’t have to worry; the fee will simply not apply to you.
- The fine will be taken from you in the form of increased closing costs or in the form of a slight increase in the monthly interest rate, which may reach 0.125% or less.
Read – Should you refinance your mortgage?
- There are still discussions ongoing about this fine, and it could be canceled. A senior White House official said in a statement to the Wall Street Journal that this decision raises some questions and should be reconsidered. But let’s also mention that the FHFA (Federal Housing Finance Agency) is entirely independent of the White House and is not at its disposal.
- In any case, refinancing was, and still is, one of the genius financial solutions. In addition to cutting down your monthly payments and interest rates, it has other benefits to offer as well. For example, it will help you pay off your house loan more quickly – the mortgage may be converted from 30 years to a period of 15 years only – and many other benefits.
Wrapping It Up
The option for mortgage refinancing is still available. Take the additional fee into account if you’re going to take this step now, but don’t shun it away completely, you can still take refinancing. But if you want to wait to see if the decision gets canceled, well, that’s up to you!
