Thanks to Guild Mortgage for this one….


“Story Behind G-Fees”

The good news is the payroll tax cut was extended in December of last year. So people who earned up to $106,800 kept their 2% tax reduction. Nothing wrong so far. But exactly how is the government going to pay for it? That’s the bad news.

The government decided to make Freddie Mac and Fannie Mae increase their fees, which means, of course homebuyers and refinancers will foot the bill. We’re not sure how they figured this was fair but why ask why?

“G- Fees” (for guarantee fee) help lower risk for Freddie and Fannie which allows them to keep rates low and lend to more people. The new increased fees will not help. The new increased fees will be passed along in the form of higher rates. It’s impossible to predict how much rates will increase but it could be as much as an eighth of a point in rate. Ouch!

The increased G-Fees officially go into effect April 1st, 2012 but you may see the increases sooner than that as investors begin to price it in. We think this is just another reason buyers need to get going now!  Also, with prices increasing and inventory continuing to shrink we think NOW is the time to get in the market if you have intentions of buying in the next six months.

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