Who is left to refinance?


Plenty of folks, per the number crunchers at CoreLogic. Putting aside the question of, "What will a world of 3.5% 30-yr borrowers look like in five years?" there are still oodles of homeowners with rates in the 5% and 6% range who could benefit. "Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher and about 33% of them had rates above 6%, according to detailed mortgage data provided to The Times by Santa Ana research firm CoreLogic."

-Terry O'Donnell

I know there are many people who have tried but various problems keep them from refinancing.  If I haven't talked to you about it shoot me an email or call at (615) 777-4663 and we can discuss it. 

Fee Increase to Impact Home Loans

The Federal Housing Finance Agency (FHFA) has again increased the guarantee fee they charge to lenders delivering loans to Fannie Mae and Freddie Mac. This is important to know, as this increase has a rippling effect that will impact the cost of mortgage financing.

Here's what's happening and what it means to home loan rates:

What exactly is this "g-fee"? The guarantee fee or "g-fee" is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk...which means home loans can be offered at terrific interest rates to borrowers that have good – but not perfect – credit.

What exactly is the impact of the rate increase? The increase will impact loans with different amortizations in different ways. For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front – but most folks will not do this.

Why is the guarantee fee being increased? FHFA has increased the guarantee fee to collect more revenue to enhance the safety and soundness of the Government Sponsored Enterprises (GSEs), and perhaps indirectly encourage private firms to participate in the mortgage market.

Who will this impact? The change will impact all new borrowers using Fannie Mae and Freddie Mac loans.

When will it start? Officially, the increase to guarantee fees will begin on December 1, 2012. However, Fannie Mae will also be making adjustments to pricing for those loans that are committed on or after November 1, 2012. It’s important to note that the increase is already being seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until December and therefore will need the increased g-fee priced in earlier.

The bottom line is that the g-fees will be going up...and this will impact homebuyers looking to obtain a home loan through Fannie Mae and Freddie Mac.

~Mortgage Market guide

P.S. I am told that most if not all companies have already reflected this is this in their pricing. And as you know the rates are still amazing. But bottom line it is another case where big government is getting paid by you and you probably didn’t even realize it.

Learning To Use Credit Wisely

While we were driving back to Nashville, we listened to the “Dave Ramsey show”, which I haven’t done in a while. I think he does a tremendous amount of good, except if you follow him completely you will wind up without a credit score. He teaches folks to live without credit and I believe people should learn to manage credit.


He does that because there are a lot of people who will never manage it. They fall victim. So credit may be  similar to addiction to alcohol, gambling or tobacco. You just learn to use it, not abuse it.

He also talked about all the good people trying to talk to the major mortgage servicing companies about missed payments, late payments, short sale approvals and the like. He used their names which I will avoid. He points out that the person receiving the calls hates their job and for the most part doesn’t want to be there. That is probably why they aren’t there the next time you call. They found a better job and moved on, leaving you to talk to someone who could care less. He just says to keep trying, but lower your expectations. And if they tell you you have to be late or skip payments, don’t listen. You just hurt yourself more in the long run.

If you want someone to talk to, to find out if you have options, please give me a call at 615-777-4663 or send me an email at george.margrave@migonline.com, I am here to help in any way I can.