Amid historically low rates, refinancing is hot, even though it was doused with cold water on August 12, when the Federal Housing Finance Agency announced significant new fees: all refinancings backed by Fannie Mae and Freddie Mac, overseen by the FHFA, would be subject to adverse market refinancing fees, equivalent to 0.5% of the total loan amount, effective September 1. The charges are intended to cover at least $ 6 billion in projected losses incurred by the Covid-19 crisis, the FHFA said in an August statement. Two weeks after the initial announcement, after an outcry from the mortgage industry, the FHFA revised its previous deadline, saying the fee start date would be December 1.

Borrowers can be forgiven for thinking that if they refinance before December 1, they will save a lot of money. After all, 0.5% of the total loan amount on a loan of $ 765,600 – the highest conforming loan, called a “high balance loan,” available in high cost areas – is $ 3,828. If this were added up front as a closing cost, it could make a refinance so costly that it might not be worth it in some cases. Initiating a refinance now, well before the December 1 deadline, seems like a great way to save money.