Mortgage Rates could cost you more with new legislation
Lock your interest rates in sooner, rather than later as the Temporary Payroll Tax cut that President Obama signed into law will impact the future of mortgage rates secured by Fannie/Freddie (conventional loans) or insured by FHA. These programs have been choosen to assist in the repayment of the bill.
The new law directs the Federal Housing Finance Agency to increase guarantee fees charged by Fannie Mae/Freddie Mac by no less than 10 basis points. This means an additional cost to the borrower of .375% to .5% of their loan amount. In April FHA mortgage insurance will increase.
With a loan amount of $200,000, the new fee for obtaining conventional financing could cost the borrower $750.00 to $1000.00. This could include any extension fees that are required to maintain a lock past its original close date (rates are typically locked for 30 days).
