Dallas-Fort Worth Real Estate Investor Club

FHFA Rule on Loan Fees

  • 04 May 2023 1:07 PM
    Message # 13191253
    Austin Bright (Administrator)

    How would the new rule affect my monthly payment on a 200K loan and/or closing costs? I'm in the top credit bracket.



  • 05 May 2023 7:03 AM
    Reply # 13192194 on 13191253

    Austin, Loan Level Price Adjustments have been around since the dawn of time with Fannie Mae and Freddie Mac.  Every so often they tweak pricing based on risk...you've just never heard about it - especially like it's being reported on by "certain" news agencies.  Back in 2021 they changed pricing to secondary homes (like a vacation home).  Then they adjusted fees to cash out loans.  In February they announced these current changes.  None of the previous pricing changes were updated to "punish" people with good credit.  Nor are they "taxing" a certain class of people to pay for a certain other class of person's loan - and it certainly didn't come from a specific political person.

    I understand what I am doing here - defending Fannie Mae and Freddie Mac.  I mean, what do I care that misinformation is floating around about these agencies?  If they don't know how to rectified rumors about themselves that's their problem.  So anyone reading this can believe what they want - I'll yield to ALL points.  It doesn't matter.  We still have to make sound decisions on properties.  TONS of other things affect interest rates too - inflation, the economy, the 10 year treasury, oil futures, global war, and sometimes the wind.  Are you paying a slightly higher interest rate right now?  Sure.  But so are people with "bad" credit too.  Hope all of this makes sense.

  • 07 May 2023 8:10 PM
    Reply # 13194544 on 13191253
    Robin Carriger (Administrator)

    Hey Austin,

    Great question... but... apparently, it's one that doesn't have an easy-to-calculate answer.  Although I have no doubt that your financial analysis abilities far exceed my own, I'm not bad at math myself.  And yet, this has too many moving parts for me to understand it.  When this first hit the news, I read multiple articles and studied a few charts until my head started hurting as I tried to figure it out.  Then I came back to earth (see below).  So... while I welcome anybody who thinks they can answer your seemingly simple question to do so right here, given the apparently intentional complexity of the change, I'm not optimistic that anybody will be able to adequately do so.

    If I go much further with my response, I'll get into politics, which I hope to not do.  So... I'll just say that, in general, this change, along with other changes, past & future, seems designed to increase revenues to Fanny & Freddy &/or the government.  With 30-yr mortgage loan rates about double what they were less than a year ago, F&F have likely assumed that they'll be better able to collect an increase from those who are more financially responsible than those who are less so.  Furthermore, they don't want to make things even more difficult for someone who is already struggling to qualify for a home loan.

    My first piece of advice is to use an outstanding lender, like Andrew Postell, and ask him during the application process what your options are for keeping any/all your fees as low as possible.  That skill is just one of the things that makes Andrew the best long-term lender I've found in my 20 years in this business.

    With that said, for those of you still reading this, allow me to reiterate a couple of Real Estate Investing fundamentals.

    • You make your money when you buy.
    • Appreciation is your friend.
    • Mortgage interest can be written off on your taxes.
    • If you buy it right (equity capture), it should cash flow positively.
    • When you buy, hold & rent, somebody else (your tenant) is paying down your mortgage loan debt.



    Last modified: 07 May 2023 8:18 PM | Robin Carriger (Administrator)
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