The payroll tax cut extension that Congress agreed to extend on December 23rd will have far reaching implications. One of those implications is increasing the cost of a mortgage for those of us in Ohio and across the country.
The loan guarantee fee paid by Fannie Mae and Freddie Mac will increase by 10 BPS (or 0.1%). Fannie Mae and Freddie Mac will be passing this additional cost along to the consumers.
Wells Fargo has already released a memo specifying the changes that they are implementing going forward.
An Ohio resident purchasing (or refinancing) a property with a $200,000 mortgage will see the cost of their mortgage increase by as much as 80 BPS (or 0.80%). This translates to either $1600 more in closing costs, or taking a higher rate by an estimated 0.125% which would increase the monthly payment by roughly $14.50.
Other lenders are soon to follow. These changes go into effect with loans closed after February 29, 2012. But it will start effecting 45 and 60 day rates as soon as this week. Due to the lower interest rates, many lenders are backed up in underwriting necessitating 45 or 60 day locks currently.
Keep this in mind while shopping for a mortgage in the coming weeks.
