Why refinancing your home may now be cheaper
There was some great news for homeowners recently. In July, the Federal Housing Finance Administration (FHFA) removed the 0.5% fee that had applied to most mortgage refinances. This means that refinancing a mortgage is now cheaper for most mortgage borrowers.
Here’s what you need to know:
Who benefits from the fee removal?
Most people who refinance their mortgages going forward will benefit from the removal of this fee. The fee applied to the majority of mortgage refinances, excluding those for jumbo loan amounts and some uncommon categories of loans.
How big are the savings from the fee removal?
The fee was equal to 0.5% of the loan amount or $500 for every $100,000 borrowed. For example, a borrower who would have paid the full fee when refinancing into a $300,000 loan will now save up to $1,500 without the fee. Because the fee was usually charged to borrowers as a higher interest rate, lower rates are now typically available for refinances.
What’s the bottom line?
With the removal of this fee and mortgage rates still near historic lows, a mortgage refinance is looking very attractive for many homeowners, particularly those who haven’t refinanced recently.
As you may know, these are the potential benefits of refinancing a mortgage:
- Obtaining a lower interest rate and monthly payment
- Replacing an adjustable rate with a fixed rate
- Removing mortgage insurance premiums
- Taking cash out for home improvements, debt consolidation, college expenses, a down payment on another property or anything else
- Shortening the loan term for an earlier scheduled payoff
By refinancing a mortgage, total finance charges may be higher over the life of the new loan, so if you’d like to see how the costs and savings add up for you, we can show you your options. Get in touch anytime to schedule a free mortgage consultation.