Don't Wait to Lock Your Mortgage Rate! You may have heard about the new Guaranty Fee that was passed by Congress at the end of December, 2011. The Guaranty Fee for all GSE's, or Government Sponsored Enterprises was increased by 10bps in order to pay for a temporary 2 month extension to the payroll tax cut, extending it until 2/29/2012. The payroll tax stimulus plan was originally enacted approximately 13 months ago to lower tax rates (FICA) for salaried and self-employed tax payers by approximately 2%.
According to the new law:
- Fannie Mae and Freddie Mac must collect an average fee of no less than 10 basis points per new loan
- FHA must raise its monthly mortgage insurance premiums 10 basis points for all new loans.
What does this mean to you or your clients? Higher mortgage rates are inevitable due to the added cost to ALL lenders who sell loans to Fannie Mae, Freddie Mac, and Ginne Mae. The new Guaranty Fee applies to ALL loans sold and delivered to the GSE's, Fannie and Freddie, at the beginning of the 2nd quarter or later. Some lenders are pricing in the adjustment gradually over the next couple months, while others are pricing their rates with one giant increase.
Regardless, if NOTHING CHANGED in the market, borrowers can expect to pay .125% to .25% more on the interest rate.
The expected cost to consumers is no less than $10 per month per $100,000 borrowed. Some experts expect Fannie Mae and Freddie Mac to collect MORE THAN is minimally required. This could add an additional $30-50 to your monthly mortgage payment per $100,000 borrowed!