Yet Another Hike In Mortgage Fees For Those Who Wait

You've Gotta Love The Gov. In December 2011, Congress voted to extend the Payroll Tax Cut. To pay for this tax cut extension, an estimated cost of $33 billion, Congress decided to increase fees on all mortgages starting in early 2012. Fannie Mae and Freddie Mac will increase their loan fees by 0.10% on each loan they insure. That will result in an 0.125% increase in interest rates, which correlates to about $25 to $30 per month on a $250,000 mortgage.

Congress also instructed FHA to increase its monthly mortgage insurance premium by 0.10%. That will result in a $20 per month on a $250,000 mortgage. While the increase won't cause the world to end, it is another installment in the long list of hits the mortgage market, and ultimately YOU, the homeowner and homebuyer, have taken since the housing and mortgage crisis began.

As interest rates have dropped, loan costs have increased, significantly.

• In 2008, the government introduced loan-level price adjustments (LLPAs) on all loans
• In 2009, the government increased those LLPAs 7 times throughout the end of the year
• In 2010, closing costs jumped 37% as banks met government compliance standards
• In 2011, the FHA more than doubled monthly mortgage insurance premiums

In fact, the FHA has increased its monthly mortgage insurance premiums 5 times in as many years.

Let's look closely at that $250,000 FHA mortgage to see the cumulative impact of these monthly mortgage insurance premium increases.

• In 2008, the monthly mortgage insurance was $100.52
• In 2009, the monthly mortgage insurance was $110.57
• In 2010, the monthly mortgage insurance was $180.94
• In 2011, the monthly mortgage insurance was $231.20
• In 2012, the monthly mortgage insurance will be $251.30

That's an increase of $150 per month on the same $250,000 mortgage from 2008 to 2012. This is yet another example that shows how waiting to buy a house or waiting to refinance your mortgage can cost you in ways you may not even realize. I wrote about this in January 2011 in a commentary entitled "Waiting To Purchase a Home Can Cost You." Congress continues to penalize current and new homeowners that are fully qualifying for their respective mortgages to pay for the recklessness of past homeowners and homebuyers.

Each time loan costs rise, it diffuses the effects of falling mortgage rates. Low rates don't matter if high costs wipe them out. Please feel free to contact me at Support@YourFavoriteLender.com if you would like to go over your specific situation.