The new fees will be applied to all investment property mortgage applications, and could add up to thousands of dollars in additional costs for borrowers.
The new fees are not specific to any one type of loan or lender, and must be paid to obtain an investment property mortgage. Fannie Mae and Freddie Mac, the two government-sponsored enterprises that back most mortgages in the United States, recently announced that they will impose a new “adverse market fee” of 0.5 percent on all investment properties. This fee must be paid when applying for a loan in order to protect lenders from potential losses due to increased default risk from investment properties.
The fee applies to all investment mortgage loans backed by either Fannie Mae or Freddie Mac, but other lenders may also impose similar fees depending on their own risk tolerance. Borrowers who apply for an investment property loan with no down payment may find themselves with a higher fee, as the risk of default is increased in these cases.
The new fees will have an immediate impact on the investment property mortgage market, as the cost of getting a loan will be higher than before. Borrowers should take the time to research and compare fees across different lenders to ensure they get the best deal. Additionally, borrowers may want to consider other loan options, such as those with lower down payments, that can help them avoid the high fees associated with investment mortgages.
In summary, Fannie Mae and Freddie Mac have implemented a new fee of 0.5 percent for all investment property mortgage loans. This fee must be paid in order to obtain a loan, and can add up to thousands of dollars in additional costs for borrowers. The fee is intended to protect lenders from increased default risk associated with investment property mortgages, and will likely have an immediate and direct impact on the investment property mortgage market. Borrowers should therefore take the time to research and compare fees from various lenders in order to ensure they get the best deal. Additionally, borrowers may want to consider other loan options, such as those with lower down payments, that can help them avoid some of the higher fees associated with investment mortgages.
This article was contributed on Jul 07, 2023
