California Mortgage Loans to become more expensive – Courtesy of G-Fees
Author bio section
I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.
FHFA (Federal Housing Financial Agency) recently announced increase in Guaranteed Fees (aka G-Fees) for all Conforming Fannie Mae and Freddie Mac loans originated in California and rest of the country. Let’s try to understand what the G-Fees is and how does it impact you.
G-Fees defined (From Fannie Mae website)
A guaranty fee, also referred to as a “g-fee, is one of the costs reflected in the interest rate on a single-family mortgage loan. This fee represents the charge by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac to guarantee that an investor in that loan will receive all scheduled principal and interest payments until the loan is repaid. The guaranty fee is compensation for assuming all credit losses and costs associated with loans that become delinquent and ultimately go to foreclosure.
Why the increase in G-Fees now:
The G-fees was increased by 10 basis points (bps) in April 2012 and now again in November 2012. The April increase was because of Temporary Payroll Tax Cut Continuation Act of 2011. To help offset the cost of a two month extension of the payroll tax cut, congress mandated this increase. Per FHFA the increase in G-fees for November represents a step toward encouraging greater participation in the mortgage market by private firms, a goal set forth in FHFA’s Strategic Plan for Enterprise Conservator ships.
Impact of Increase in G-Fees for California borrowers:
Borrowers with 30-year, fixed-rate mortgages near the current conforming loan limit of $417,000 can expect to pay more than $8,500 over the life of the loan to fund the 10 basis point fee.
The new 10 basis points increase is for all loans delivered after November 1, 2012. But don’t be surprised if the lenders start to factor that into California mortgage rates a month or two in advance. That means you as the borrower will pay more for getting a mortgage loan.
If you are in the market for Refinancing or buying a home in California, Washington or Oregon – be sure to call me so that I can offer you my expertise and quote you our best rates.
Related Posts
- 62Shashank Shekhar hosts "Mortgage Matters - Practical Advice From America's Premier Mortgage Expert". The show airs on Desi KLOK 1170 AM in San Francisco Bay Area every Wednesday at 5:50 PM. In Dallas-Fort Worth metro area, the show airs on FunAsia 104.9 FM, every Tuesday at 5:45 PM. In Houston,…
- 58According to Mortgage Bankers Association's (MBA) weekly mortgage application survey, California mortgage rates has now increased seven of the last eight weeks. Most of the big banks are now advertising Annual Percentage Rates (APR) just under 4%. 30 Year and 15 Year Fixed Mortgage Rates The average interest rate for…
- 58The Week that was: The bond and mortgage markets were choppy, swinging on weak Treasury auctions (the 10 yr and 30 yr). Not much in the way of economic measurements but what there was were better than what had been expected. Retails in Nov were better than markets were looking…
- 57Rejoice California Homebuyers and Home Owners - The $729,750 Loan Amount Limit for Conforming and FHA Loans could be coming back. These loan amounts were rolled back to $625,500 few weeks back. Bloomberg reported - The U.S. Senate adopted a measure that would raise the maximum size of a home…
- 57Mortgage Rates have skyrocketed to their highest levels since August 2012, prompting some banks to increase the rate to 4% and beyond. On Friday, MBS (the mortgage backed securities that directly influence mortgage rates) tanked 62 basis points. That came after 26 basis points drop on Thursday. More bad news…
