The refinancing fees on mortgages that were supposed to be charged from 1 September have now been delayed for a further three months. An announcement was recently made by the Federal Housing Finance Agency informing people that up until 1 December, those who are availing new refinancing would not have to pay the 0.5% fee.
This allows homeowners to not only get mortgages at very low rates but also avoid this fee which normally adds up to big numbers. Mortgage broker, Dennis J, Quaranta says that rates are at an all-time low making it the golden time to consider refinancing your mortgages.
However, time is of the essence as lenders are currently facing large numbers of incoming applications. Although the FHFA fee does not come into effect until 3 months, longer processing times also need to be taken into account.
If a mortgage is applied for a bit late and is closed in December, the fee would have already been added to it beforehand. A senior loan advisor, Orlando Diaz, said that lenders mostly take up to 45-days to close which makes it likely that the fee will be start getting added back by October.
As, a truck-load of people will be sending in refinancing applications in the coming weeks, it is expected that some companies may even take as long as 60-90 days in closing. This means that refinancing decisions needs to be taken quickly within the next 6 weeks.
As a result of the pandemic, interest rates are currently very low which means cash-out options and refinancing mortgages can help people reduce their monthly payments. According to Diaz, this will help people stay secure financially to some level even if they face other problems like unemployment and loss of incomes as a result of the pandemic.
Quaranta believes that a big reason for the temporary exemption of this fee is to financially protect middle-class people who have been most affected and are currently struggling to make ends meet. However, this exemption only applies to mortgages that amount to less than $125,000.
Further good news is that even after December 1, rates will continue to stay lower than normal as the economy will heavily rely on the housing market to recover.