As per the weekly survey of rates done by Freddie Mac for conventional mortgages, the mortgage rates are gripping near record lows with 30-year fixed-rate mortgage averaging for 3.95% for the week. The customers are supposed to pay attention to the increase in mortgage rates because this can be symbol of high increase in government-backed mortgage loans.
Guy D. Cecela, the publisher of Inside Mortgage Finance, said that this loan may be one that is sold to government-sponsored units Freddie Mac and Fannie Mae or a loan backed by Federal Housing Administration. It has also been said by Cecela that even though none of the stuff will have high impact, the message for the customers is that the government-backed mortgages cost is going to rise high.
What do you need to pay for tax cut?
The mortgage lenders are supposed to pay the guarantee fee to Freddie Mac and Fannie Mae for securing the loans. This guarantee mortgage fee will rise on 1st April by one-tenth of a percentage point. The chief economist for online lender Quicken Loans, Bob Walters said that the cost will be accepted by the mortgage borrowers through interest rates that are about a high by eighth of a percentage point.
The increase in mortgage fees is a part of the payroll-tax cut deal that has reached in December.
According to Walters, the mortgage lenders generally factor these costs into interest rates particularly because it will take some time before they may be able to sell the loans to Fannie Mae and Freddie Mac. He also said that the mortgage lenders predict it will usually take 45 to 60 days in order to close a loan and another 15 to 30 days before delivering the loan to Fannie Mae and Freddie Mac.
Although this increase in mortgage rates is slightly high, some people think that it may rise to more fees in future. According to the national mortgage sales manager at Bank of the West in San Francisco, Karen Mayfield, Fannie Mae and Freddie Mac needs to be profitable in terms of mortgage rates.
Mayfield said that for FHA-backed loans, the annual mortgage insurance premiums are about to rise by one-tenth of a percentage point on 1st April. This equals to $200 more than a year in case of mortgage insurance on $200,000 FHA-backed mortgage. The premiums will rise in another quarter point for mortgages which is greater than $625,500 affecting the borrowers in high-cost markets such as California.
Walters said that the government is keeping an eye at the insurance cost that they think should be and as per the general consensus, the cost of insurance needs to be high.
Some mortgage borrowers will find another mortgage cost while going to file for their 2012 taxes in the year 2013. This is because the tax year of 2011 is the last in which the borrowers were able to subtract the mortgage insurance that they had paid either with the help of FHA or a private insurance company.
About the guest blogger: Author Bio – Peter Harper is the Community Mentor of MortgageFit and has been contributing his suggestions to the Community since 2005. Not just that, he has also made notable contributions through the various articles written on different subjects related to the mortgage industry. Few of his popular articles would include names like ‘Mortgage that you can afford’, ‘Mobile Home Loan with Bad Credit’, and How much mortgage can I borrow?’
How do you feel about these fees being passed down to consumers? Please leave your comments below; we’d love to hear your thoughts.