WARNING New Regulation and Why Refinancing May Cost You Big
By Emilio DiSpirito, Realtor / Radio Show Host DiSpirito Team Real Estate Show www.DiSpiritoTeam.com
It’s likely that you or I have roughly a dozen or so people in our phone books that will be affected by the topic of this blog. I wish there were enough
time to hammer the phone daily to figure out who these people are and warn them about topics like this!
Fortunately, with our ability to broadcast information through wonderful news outlets like this, my podcast, blogs and social media, the chances of helping more people than calls, we can physically make, is real.
In a nutshell, Government Sponsored Enterprises (GSE’s) Fannie Mae and Freddie Mac are commanding a one-half percent fee on all refinances locked and or closed after September 1, 2020. Before you write this off and say this won’t effect you… roughly 53% of all mortgages are held by Fannie Mae and Freddie Mac! This includes conventional mortgages as well!
Let’s put this into simple perspective:
$320,000 Median Home Value in the US would see a $1,600 fee
$113,900 average equity position according to CNBC
Fannie and Freddie only allow you to take 80% of equity
With new fee (under these numbers), you are lacking the ability to obtain roughly 22% of your money with a refinance
The percentage of equity you can tap into diminishes heavily when you have fewer dollars of available equity.
So what could happen?
More American’s will list their home to maximize their equity and will purchase a more expensive home, at around the same payment.
This will free up entry level home inventory for first time buyers
New construction will be in even larger demand
Prices will continue to appreciate
Think about it… would you rather take out 78% of your equity and stay in the same home or would you rather take out 90% to 92% after covering all associated costs of selling a home on the market and purchasing a larger home with space for your in home office, work out studio, larger yard, etc. all while paying around the same price or even a few hundred more each month than you are now?
I always suggest it’s best to weigh all of your options, to understand which play will work the best for you, now and in the long run! Cheers!