Higher mortgage fees may deter home buying
Government-backed investors, Freddie Mac and Fannie Mae have both raised mortgage fees thereby raising concerns among borrowers who’ll now have to spend more in getting a mortgage.
The National Association of Realtors and National Association of Home Builders have protested against a series of such increases for the past 15 months. The Associations say that the Investors are adding on to the mortgage costs thereby deterring home buying or refinancing at a time when the housing market needs a boost.
Freddie Mac’s higher fees affect mortgages offered against condominiums, interest only loans, refinance loans and others with combinations of low credit scores and down payment. In spite of Freddie Mac and Fannie Mae not being directly involved with borrowers, they can have a big impact on the rates and fees the latter pay.
When a considerable number of loans are being originated, Freddie Mac and Fannie Mae decrease the price they pay in order to compensate for higher risk characteristics. These extra charges are passed on to borrowers in the form of high mortgage costs or rates.
In the aftermath of housing crisis, raising mortgage loan fees could deter borrowers from applying for loans. As it is, months of foreclosure have been a matter of concern for homeowners. It needs to be seen as to how borrowers react to the investors’ decision to raise mortgage fees.
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