Why Refinancing Just Became More Expensive

Couple unhappy about fee
Photo by pathdoc / Shutterstock.com

A new Federal Housing Finance Agency fee could mean your next mortgage refinance will be a little more expensive than you hoped.

Beginning this month, the agency is assessing a 0.5% fee on lenders for newly refinanced mortgages.

The fee itself is designed to help Fannie Mae and Freddie Mac cope with losses stemming from the coronavirus pandemic. The Federal Housing Finance Agency oversees the two mortgage giants, which back millions of U.S. mortgages.

Under the federal CARES Act passed in March, homeowners facing a coronavirus-related hardship have been able to suspend mortgage payments. As a result, Fannie Mae and Freddie Mac have incurred more than $6 billion in losses.


The fee itself may not be obvious to all borrowers. Tony Grech, senior mortgage loan officer at Luxury Mortgage Corp., told Yahoo Money:

“Most applicants will not see the fee as a cost or points charged to them. The refinance fee will be reflected in the interest rate rather than the fees. To the average borrower, this equals .125% to .25% higher in rate.”

The fee will add $500 to the cost of every $100,000 a homeowner borrows, not including interest.

Some homeowners may be able to escape the added cost altogether, as loans of less than $125,000 are exempt from the fee.

Others who will be exempt from the fee include:

  • Borrowers with nonconforming mortgages, which are loans that don’t meet Fannie Mae and Freddie Mac guidelines. In most of the U.S., conforming loan limits for one-unit properties is $510,400 in 2020 and will be $548,250 in 2021.
  • Borrowers who refinance into government mortgages backed by the Federal Housing Administration, Department of Veterans Affairs or Department of Agriculture.

Reports also suggest that some lenders may pay the fee themselves instead of passing it on to borrowers.

Mortgage rates remain near all-time lows, and a refinance still might make sense for you, even in light of the new fee. For more, check out “6 Tips for Refinancing Your Mortgage During the Pandemic.”

If you are thinking of refinancing, stop by Money Talks News’ Solutions Center and search for the best rates.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
9 Everyday Problems You Can Solve With Vaseline
9 Everyday Problems You Can Solve With Vaseline

Forget expensive specialty products. Good ol’ petroleum jelly can address many common annoyances.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

Why Cutting the Cord Can Be Confusing — and How to Decide If It’s for You
Why Cutting the Cord Can Be Confusing — and How to Decide If It’s for You

Streaming TV might sound like the antidote to sky-high cable bills, but cutting the cord is easier said than done.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

70% of Older Adults Botch This Basic Retirement Question
70% of Older Adults Botch This Basic Retirement Question

Can you answer this fundamental retirement income question?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

9 of the Best Things to Do When You Retire
9 of the Best Things to Do When You Retire

You’ve waited all your life for this moment. Make the most of your retirement.

3 Colors That Can Ruin Your Car’s Resale Value
3 Colors That Can Ruin Your Car’s Resale Value

Select the wrong color for your next car, and it could depreciate twice as fast as others.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Never Buy These 10 Things on Amazon
Never Buy These 10 Things on Amazon

Just because you can purchase something on Amazon doesn’t mean that you should.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

8 of the Worst Things to Buy at Target
8 of the Worst Things to Buy at Target

No store can specialize in everything. For some purchases, it’s smart to shop elsewhere.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

8 Things You Should Be Buying at Thrift Stores
8 Things You Should Be Buying at Thrift Stores

For one expert, these secondhand bargains stand out from the rest.

20 Great Part-Time Jobs for Retirees
20 Great Part-Time Jobs for Retirees

Retirees can dial back the intensity of work while continuing to bring in a paycheck.

12 Deep Discounts Available on Amazon This Friday
12 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

11 Foods That Can Keep for Years
11 Foods That Can Keep for Years

These are some of the longest-lasting groceries you can buy.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

Selling Your Stuff? Don’t Fall for These 5 Negotiating Tricks
Selling Your Stuff? Don’t Fall for These 5 Negotiating Tricks

Don’t let buyers fleece you — whether you’re selling via a yard sale or Facebook Marketplace.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.