Mortgage Fees Set to Rise As Consumers Will Be ’Taxed’ With Paying For the Mortgage Lenders Guarantee Fee
(3/8/2012 - Austin, Texas) - The annual mortgage insurance premiums are about to rise by one-tenth of a percentage point on 1st April for FHA-backed loans. This increase in mortgage fees equals to $200 more a year in case of mortgage insurance on $200,000 FHA-backed mortgage. The premiums will rise in another quarter point for mortgages which is greater than $625,500 affecting the borrowers in high-cost markets such as California.
What is the cause for the increase in the mortgage fees? Because the guarantee mortgage fee is set to raise by .1% on April 1st. The guarantee mortgage fee are fees charged by mortgage-backed securities providers, like Freddie Mac and Fannie Mae, to lenders for bundling, servicing, selling and reporting to investors. These fees are supposed to be paid by the mortgage lenders.
The increase in fees was part of the payroll tax reduction legislation that was passed last December. The guarantee fee is set to rise 10 basis points on April 1, but some lenders are already writing the fee into new mortgages.
“The increase in mortgage fees shows how tricky taxing big business is,” opines Phill Grove, real estate trainer, investor, and creator of the Assignment of Mortgage Payments System real estate investing system that allows real estate professionals to sell ’unsellable’ houses to ’unloanable’ buyers at market price. “While consumers were sold on the benefits of the payroll tax cuts in Decemeber and told that the banks would pay for it, the reality is that the banks simply slide the fee down to the consumer.”
The chief economist for online lender Quicken Loans, Bob Walters said that the cost will be accepted by the mortgage borrowers through interest rates that are about a high by eighth of a percentage point. According to Walters, the mortgage lenders generally factor these costs into interest rates particularly because it will take some time before they may be able to sell the loans to Fannie Mae and Freddie Mac. He also said that the mortgage lenders predict it will usually take 45 to 60 days in order to close a loan and another 15 to 30 days before delivering the loan to Fannie Mae and Freddie Mac.
“Despite the ’record low’ interest rates for mortgages and the record high housing affordability indexes, there are so many other obstacles involved in obtaining a loan that many real estate buyers have lost faith in even trying to buy a house,” continues Mr. Grove, who has successfully participated in more than 1,200 real estate transactions since 2004. “Due to the difficulties surrounding banks and mortgages, many people are seeking alternatives, such as owner financing, to the mess created by the banks.”
Bankers definitely understand how to make lemonade out of lemons when it comes to any type of tax increase or regulatory fee. Unfortunately, consumers don’t have that option unless they start utilizing strategies to purchasing houses that circumvent the banks, like owner financing.
- Contact Information
- Phill Grove
- REI Maverick
- (1) 512-853-9522
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