WARNING – New Regulation and Why Refinancing May Cost You Big
By Emilio DiSpirito, Realtor / Radio Show Host DiSpirito Team Real Estate Show
It’s likely that you or I have roughly a dozen or so people in our phone books that will be affected by the topic of this blog. I wish there were enough time to hammer the phone daily to figure out who these people are and warn them about topics like this!
Fortunately, with our ability to broadcast information through wonderful news outlets like this, my podcast, blogs and social media, the chances of helping more people than calls, we can physically make, is real.
In a nutshell, Government Sponsored Enterprises (GSE’s) Fannie Mae and Freddie Mac are commanding a one-half percent fee on all refinances locked and or closed after September 1, 2020. Before you write this off and say this won’t effect you… roughly 53% of all mortgages are held by Fannie Mae and Freddie Mac. This includes conventional mortgages as well.
Let’s put this into simple perspective:
- $320,000 Median Home Value in the US would see a $1,600 fee
- $113,900 average equity position according to CNBC
- Fannie and Freddie only allow you to take 80% of equity
- With new fee (under these numbers), you are lacking the ability to obtain roughly 22% of your money with a refinance
- The percentage of equity you can tap into diminishes heavily
- when you have fewer dollars of available equity.
So what could happen?
- More American’s will list their home to maximize their equity and will purchase a more expensive home, at around the same payment.
- This will free up entry level home inventory for first time buyers
- New construction will be in even larger demand
- Prices will continue to appreciate
Think about it… would you rather take out 78% of your equity and stay in the same home or would you rather take out 90% to 92% after covering all associated costs of selling a home on the market and purchasing a larger home with space for your in home office, work out studio, larger yard, etc. all while paying around the same price or even a few hundred more each month than you are now?
I always suggest it’s best to weigh all of your options, to understand which play will work the best for you, now and in the long run. Cheers!
If you would have asked me what I wanted to be growing up, little Emilio would have told you “an archeologist” or “an architect” despite the fact that at age 8 I had my first lemonade stand, landscaping business and was recording my first “news show” on my boombox! Well, I never was much good at trigonometry and did could not see myself traveling for months and possibly years at a time, so becoming an architect or archaeologist clearly did not happen!
Fast forward 26 years later and I’m running a team of the finest residential real estate professionals, own a media company and host my very own radio news show about real estate!
In September of 2017, I married my best friend, Jaclynn, and we have two wonderful children, Destinee and Emilio, V. We have 3 dogs, one of which is a rescue and live in lovely Rhode Island. Jaclynn owns a high-end hair salon in addition to an on-location hair and makeup business!
For 7 years straight it seemed that I had put in more hours than the day had to give on my real estate business. 7 days a week, 14 to 16 hour days, without a break! Why? My friends and family did not understand the sheer magnitude of moving parts and services we offer to our clients during a transaction! One slip up or one missed call could mean make or break for someone’s dream home or even a lost deposit!
Running a team of like-minded, highly qualified and capable professionals has allowed me to offer a very streamlined, simplified and efficient approach to the sales process for our clients and allowed me to earn personal time again with my family while not missing a beat for my clients!
When I’m not working, I’m with my family, riding my mountain bike, eating at a number of local restaurants, enjoying live entertainment, hiking, skiing or reading!