A New Mortgage Refinancing Fee. Here’s What You Should Know!

As of December 1, 2020, a new refinance fee is now in effect. This comes at a time when we are having record-low mortgage rates, a great time to refinance. “The Federal Housing Finance Agency (FHFA) will begin charging a mortgage refinance fee that could impact the cost of your mortgage.”

What is the fee and how will it affect me?

The “adverse market refinance fee,” of 0.5%, will be added to any new refinanced mortgages beginning December 1, 2020. This new fee is designed to help Fannie Mae and Freddie Mac offset some of the COVID-19 related losses.

“In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment,” Fannie Mae explained in a letter announcing the fee.

The new fee could potentially increase the interest rate homeowners are quoted if they do not negotiate with the lender to waive the fee.

“On the whole, borrowers don’t seem too concerned about this fee because it’s baked into the rate they’re being offered by their lenders.” However, our team at Gulati Law, like our borrowers to be well informed of the potential increased costs on your mortgage.

Below are a few things borrowers should know:

  • Some Borrowers are exempt if they fall under the following:
    • If your principal is less than $125,000;
    • Borrowers refinancing VA or FHA loans; and
    • If you are buying a home and taking a new loan.
  • Lenders might find different ways to charge the fee.
    • The FHFA charges the fee directly to lenders. Some may role it into the interest rate, while others may role it into the closing costs.

This fee should not deter you from refinancing, as the rates are the lowest on record. This new fee may still be negotiated with your lender. It is advisable to discuss with your Real Estate Attorney, to make sure all fees charged by the lender are reasonable and if it is even worthwhile to refinance based on how much the borrower can potentially save.

The fee may not last, however, it is still here for now! Stay informed and discuss it further with an Attorney at Gulati Law.

Source: Forbes 

 

Title to Real Estate Property!

 

A deed is a legal instrument used to convey real property. There are three main deeds in Florida, or three methods of transferring property. They vary depending on the guarantee that is offered by the seller, the type of property, or reason for transfer.

1) General Warranty Deed

  • Most complete form of ownership, or highest level of protection to buyer
  • Guarantee that grantor (seller) has legal title

2) Special Warranty Deed

  • Provides limited warranty of title
  • Seller guarantees he/she has not adversely affected the title to the property during their ownership period
  • Common for transactions with trustees, or personal representatives, & foreclosures

3) Quitclaim Deed

  • No warranties or guarantees from seller
  • Most risky form of ownership
  • Conveys the interests of the grantor (seller) but grantor does not represent he/she has any rights to convey
  • Common to transfer property among family members or when dealing with a divorce
  • Common to clear defects in title

lisa-jones-sale-pending-orlando-001

In most real estate transactions, we recommend obtaining a general warranty deed in congruence with a title insurance policy to ensure you have complete equity, or ownership in your new property & proper protection for any unexpected encumbrances. However, every case is different and you should discuss your options with a Florida Real Estate Attorney.

Stay tuned for our next blog on – which Deed is right for you!

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    Gulati Law