Starting in 2012, Fannie Mae and Freddie Mac are expected to increase their fees, which could impact homebuyers depending on the risk of their loan or the location of their home.

Here’s what you need to know – including what’s really happening and what it means to homebuyers.

What fee is being increased?

First, it’s important to remember that Fannie Mae and Freddie Mac do not actually make home loans. Instead, they provide financing to lenders by purchasing mortgages from those lenders. Then, Fannie and Freddie either keep those mortgages on their books or they package them (in the form of securities) for sale to investors.

That means, Fannie and Freddie don’t actually charge direct fees to homebuyers. But they do charge fees to lenders when they purchase home loans from those lenders. The lenders, in turn, build those fees into the home loans they offer. So the bottom line is that any increase in the fee that Fannie and Freddie charge lenders will essentially be passed on to consumers.

However, the fees likely won’t be increased the same amount across the board. For example, Fannie and Freddie may charge higher fees when purchasing riskier loans or they may vary the fees based on which part of the country the home is located in (taking into account things like the foreclosure rate of the location).

Why is this happening?

Fannie and Freddie were seized by the government three years ago to help protect them from failing. That’s important because Fannie and Freddie (along with other government agencies) actually guarantee about 9 out of every 10 new home loans—and with the challenges that the housing market has seen recently, those guarantees have been extremely important. However, Fannie and Freddie have also cost the taxpayers more than $140 Billion.

So Fannie and Freddie will gradually increase their guarantee fees next year and reduce the size of the home loans they purchase in an effort to:

1. Save taxpayers money and
2. Reduce the amount of government involvement (by attracting more private funding to the mortgage market)

What does this mean to homebuyers?

As stated above, the fees likely won’t be increased exactly the same across the board—so the impact will vary depending on the location of the home, risk of the loan, etc.

But we can look at one example to get an idea of the potential impact. For example, as the Wall Street Journal reported, if we calculate an increase of 0.1 percentage point (which is a number the White House proposed), we can see that a home loan for $220,000 would be increased by about $15 per month.

So the increase may not be very noticeable for many homebuyers. And, if people purchase a home while affordability is still high and home loan rates are still historically low, they’ll still benefit significantly compared to other times throughout history.

What should people do?

The fees are expected to begin increasing in 2012 and gradually rising thereafter. If someone you know is thinking

Eligible Loans must close/fund/disburse on or before June 30, 2012

If  you have a Fannie Mae or Freddie Mac loan, you may qualify for HARP refinancing options. For more information, please contact us directly or request a FREE Online Rate Quote . We look forward to working with you. Visit us on the web:  http://www.refga.com

HARP options available through Real Estate Financial Inc:

Fannie Mae® DU Refi Plus
     > Available for borrowers who have not been more than 60 days late in the past 12 months
     > Reduced income/employment documentation requirements
     > Only loans currently owned by Fannie Mae are eligible
     > No limit on the number of financed properties owned by a borrower
     > Condominiums do not need to be recertified
     > Appraisal may not be needed for the refinance transaction
     > Primary residence, second home, and non owner occupied investment properties eligible

Freddie Mac Relief Refinance – Open Access
     > Available for borrowers who have not been more than 60 days late in the past 12 months
     > Reduced or no income/employment documentation
     > Only loans currently owned by Freddie Mac are eligible 
     > Primary residence, second home, and non owner occupied investment properties eligible

If  you have a Fannie Mae or Freddie Mac loan, you may qualify for HARP refinancing options. For more information, please contact us directly or request a FREE Online Rate Quote . We look forward to working with you. Visit us on the web:  http://www.refga.com

Real Estate Financial is pleased to announce our

Our Program for Disabled Children and Elderly Parents allows  parent-borrower or child-borrower transactions to be considered a primary residence for eligibility, regardless that parent-borrower / child-borrower will not occupy the property. Treating the transaction as a primary residence has many benefits including reduced down payment requirements and a higher limit on allowed seller contributions then if the home were purchased as investment property.

• Parent-borrower transaction:
  • Parents may purchase or rate/term refinance housing for adult children who are physically or developmentally disabled who are unable to work or who have insufficient income to qualify on their own.
• Child-borrower transaction:
  • Adult children may purchase or rate/term refinance housing for elderly parents who are unable to work or who have insufficient income to qualify on their own. For this program, elderly is defined as 62 or more years old.

• Disabled child or elderly parent must occupy property as primary residence but are not required to be on the Note or Title if income or credit is not used to qualify.

Feel free to request a FREE Rate Quote or to Contact Us directly. We look forward to working with you.

The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable.

A major portion of the Making Home Affordable initiative includes Fannie Mae’s DU Refi Plus & Freddie Mac’s Relief Refinance (Open Access) program which allows borrowers who are current on their existing mortgage to refinance when their home values may have declined and/or Mortgage Insurance may not be available.

Both programs allow borrowers to refinance their current mortgage up to 105% loan to value with no limitation on total loan to value when subordinate financing is in place. If your current loan does not have mortgage insurance, then your new loan will not mortgage insurance regardless of loan to value!

Feel free to request a FREE Rate Quote or to Contact Us directly.

As the Real Estate and financial markets continue to move up and down, mortgage rates can also be affected. Since mortgage rates are more closely tied to the bond markets, an up or down move in the stock market may not have the result in mortgage rates that one might expects. In fact, many times the resulting mortgage rate changes are counter-intuitive.

More importantly, rates change daily and they can change quickly. Some mortgage professionals have recently noted that their rate quotes have only had shelf lives of three to four hours before market changes have deemed them inaccurate.

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How does a consumer navigate fast changing markets in order to refinance their existing loan or purchase a home with the most favorable terms possible?

1. Plan – Define your needs ahead of time, do not wait until the last minute. This is especially true of home purchases.
2. Consult – Talk to your mortgage professional on a regular basis so they can interpret recent market events to you and communicate how those events can affect you.
3. Execute – When you have defined your needs and have determined that now is the best time to move forward, don’t shop yourself out of a good loan! What does this mean? It is easy to get caught up in shopping for the best rate, but it is not uncommon for home owners to miss locking their loan at a great rate because they are in search of better rates that do not exist or that they do not qualify for. It is important to shop to insure you are getting the best rate possible, but set limits to the number of companies you are going to consider doing business with and be careful of having your credit report needlessly and more times than is necessary!