In June we talked about the current environment of low interest rates which makes it a good time to refinance your mortgage if your interest rate is higher than the current rates (around 3%, see the latest numbers at http://www.freddiemac.com/pmms/). It is still a good time to do that, but the clock is ticking with a new fee set to take effect on December 1. Lenders will likely raise their rates as early as October to offset this fee, so if you are thinking of refinancing, don’t put it off.
The Federal Housing Agency introduced a new fee last month that applies to all refinance transactions. Borrowers will now pay an extra 0.5% (half of a percent) fee. The agency expects to lose money due to the recession/pandemic and the fee is meant to help cover those losses. It was set to take effect August 12 but the mortgage industry raised a fuss and it was postponed until December 1. This will cost the average borrower around $1400 extra over the life of their loan. The only applies to refinancing, not purchase mortgages.
If your current mortgage rate is above 3.5%, you have good credit, and have at least 20% equity in your home, this might be a good time to look into refinancing. We recommend soliciting quotes from several lenders, including both banks and online lenders, because rates do vary.