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Refinancing will be more expensive effective December 2020

Refinancing your mortgage will be more expensive based a new Adverse Market Refinance Fee for all Fannie Mae and Freddie Mac home loans (a.k.a. conforming loans) effective December 1, 2020. The Federal Housing Finance Agency inked this new refinance fee in response to the projected losses due to COVID-19.  Original launch date was to be September 1, 2020 however that date has been extended and now will be effective December 1, 2020. The Adverse Market Refinance Fee will be applicable for basically all new limited cash-out refinances (a.k.a. rate and term refinance) and cash-out refinances.


Simply put, refinancing means getting a new mortgage to replace your current mortgage.  There may be one or more benefits to refinancing your mortgage based on your needs and/or wants (e.g.  secure a lower interest rate, convert a variable rate mortgage to a fixed rate mortgage, change the term of your mortgage, unleash equity to make a large purchase or consolidate debt, get rid of Private Mortgage Insurance).


If refinancing your current mortgage is right for you and your family, doing it before the effective date of Adverse Market Refinance Fee will save you money or interest.

~Mortgage Strategist Logan Martini with the Martini Mortgage Group at Benchmark Mortgage

Fannie Mae and Freddie Mac have a maximum loan amount which changes annually.  In 2020, the conforming loan limit is $510,400.  If refinancing the max conforming loan limit after December 1, 2020,  your refinance cost would be increased by $2,552.  There is an advanced refinance strategy to bury the Adverse market Refinance Fee into your interest rate.  Generally,  this would mean a higher interest rate of 0.125% to 0.25% for the term of your home loan.

IMPORTANT: the Adverse Market Refinance Fee is ONLY applicable to Fannie Mae or Freddie Mac home loans when one is refinancing.  It is not applicable for VA Home Loan,  the VA IRRRL (Interest Rate Reduction Refinance Loan), FHA Home Loans, Rural Development Home Loans (a.k.a. the USDA Home Loan) or Jumbo Mortgages.


Circumstances are more important than cost and cost is more important than price when refinancing.

~Chief Mortgage Strategist Kevin Martini with the Martini Mortgage Group at Benchmark Mortgage

Many homeowners see the incentive to refinance their current mortgage based on the current historical low mortgage rate environment but just because of this epic mortgage rate environment is present, it does not mean it is right for one to refinance.  Yes, refinancing is right for many however it is not right for all because not everyone has the same personal or financial situation and this is why only a confidential conversation with a local and trust Mortgage Strategist is required to not just know your options but to have clarity of the economics and benefits.  Yes, it matters who your Mortgage Strategist because a lower rate with a higher price may not truly provider you with the lowest cost of borrowing.

Kevin Martini

Kevin Martini is the founder of the Martini Mortgage Group; Branch Manager and Senior Mortgage Strategist with Cardinal Financial Company; a husband to a magnificent lady who was his high school sweetheart; a father of 2 amazing men; a son to tremendous parents; a grandfather to beautiful grandchildren; a loyal friend; a trusted and experienced advisor to the families he serves.

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