Fannie and Freddie's New Refinancing Fees

Welcome to Saving Money with Andrew!

One of my favorite topics this year has been the unprecedented decline in interest rates (see here and here) to never before seen levels.

Just look at this:

As Treasury rates—the rate at which the US government borrows—have fallen, so have mortgage rates, with 15-year and 30-year fixed rates averaging a mind-boggling 2.37% and 2.86%.

This is great for new homebuyers, with a 1% decrease in rate (from prior levels) on a $400k 30-year fixed-rate mortgage reducing monthly payments by over $200. That’s a lot of money over a 30-year term.

And existing homeowners can benefit from refinancing.[1] As discussed previously, refinancing can offer some homeowners significant savings, depending on the time remaining on the mortgage and how long the homeowner plans to stay. At these all-time low rates, the savings are even greater than they were a few months ago.

Seeing this massive wave of refinancing, Fannie Mae and Freddie Mac (the largest purchasers and guarantors of home mortgages in the US) are attempting to take advantage via a new “Adverse Market Refinance Fee”, which will add a one-time 0.5% fee ($2000 on a $400k mortgage) when refinancing any mortgage with a balance above $125k. The fee was originally scheduled to begin on September 1st, but has since been delayed to December 1st. If you’re considering refinancing and have decided it’s right for you, it’s probably a good idea to do it before December.

And now…Andrew’s pick of the week:

I am very excited about the upcoming film adaptation of Frank Herbert’s Dune, the best-selling science fiction novel of all time.

Dune is weird, complex, and beautiful. Five years ago my wife and I both read it and were blown away. It’s a sweeping sci-fi novel, sure, but it’s also an incredible meditation on our relationship with and impact on the environment.

I highly recommend the novel, and the movie looks pretty awesome too. Here’s hoping that this movie succeeds where David Lynch’s 1984 attempt and Alejandro Jodorowsky’s never-made version (itself the subject of the amazing Jodorowsky’s Dune) failed.

Bonus points for great use of a cover of Pink Floyd’s Eclipse.

I hope this has been helpful. If you liked it, please share it with a friend! Also, please send me your feedback, requests, and success stories.

[1] Notably, despite COVID-related lockdowns and inconvenience, mortgage activity hit an all-time high in the second quarter of 2020.