In every great action movie, there’s a ticking-time-bomb element. If mortgage lending were an action movie, then rates are the time bomb. Since there’s no telling when rates will rise again, each week borrowers are either granted another chance to lock in a new low rate or the bomb blows and rates rise, destroying the big savings opportunity.
Rates fell again this week, so would-be mortgage borrowers can breathe a sigh of relief. But refinancers have another countdown element to contend with—the new Adverse Market Refinance Fee that begins on Dec. 1.
The Federal Housing Finance Agency (FHFA) will add this fee to most refinances that are sold to Fannie Mae and Freddie Mac (which account for about 70% of all mortgages).
The fee will add half a percentage point cost to the loan. So if you refinance into a $200,000 mortgage, then the fee would be $1,000. It’s unclear yet how lenders will pass this fee on to borrowers. Some might include the new cost in the interest rate while others might add it to the closing costs.