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Follow on Google News | How Does the Housing Loan Fee Hike Affect Consumers?Mike Cox, mortgage expert from Rates in Motion, explains which house loan fees are rising and why.
By: Julie Henningfield In simple terms, the G Fee is paid by lenders to the mortgage-backed security providers such as Fannie Mae, Freddie Mac and HUD to protect against losses that stem from credit risk. It is an insurance premium paid by the lender to the provider, and it is deducted from the coupon rate and credited to the provider. Portions of the fee cover administrative expenses as well. So how will this new fee affect borrowers? “This increase is already affecting borrowers whose loan transaction interest rates have not been locked in with their lender,” said Mike Cox, 12-year veteran of the mortgage industry and host of Rates in Motion. He added, “Many people will already see the G Fee increase even though it is not effective until April 1. The reason being, the loan sale and securitization cycle and protocol may experience delays that would force the investor to cover the cost of the additional fee if the loan is securitized after the April 1 start date. Since the process has experienced delays, the ‘better-safe- As an example, Cox said on a $200,000 mortgage additional fees tally anywhere from $500 to $1,000 for the borrower or about .125 in note rate. Cox said the fee could discourage borrowers from refinancing their loan because the additional fees may lengthen the time for borrowers to receive the net tangible benefit of the interest rate reduction. “On the home purchase side it boosts the interest rate or fee – which will reduce the amount of the loan that borrowers would receive for home loan purchases. The average borrower qualified to purchase a more expensive home prior to the announcement of the fee increase,” Cox said. Cox said there is a way for borrowers to avoid the new fee, but “it is very limited.” “There are portfolio products offered by some banks and lending institutions that would not be impacted by the fee increase. These programs are usually very restrictive on qualifications,” To learn more about Rates in Motion, visit www.ratesinmotion.com and http://www.youtube.com/ About Rates in Motion Hosted by Mike Cox, an industry expert with 12 years of experience, Rates in Motion serves as a transparent resource for individuals interested in learning more about mortgage rates and virtually all topics pertaining to the home-buying and refinancing experience. Rates in Motion thrives to help consumers find the best rates and provides consumers with the most up-to-date information available in the marketplace today. # # # Hosted by Mike Cox, an industry expert with 12 years of experience, Rates in Motion serves as a transparent resource for individuals interested in learning more about mortgage rates and virtually all topics pertaining to the home-buying and refinancing experience. Rates in Motion thrives to help consumers find the best rates and provides consumers with the most up-to-date information available in the marketplace today. End
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