New mortgage fee for condo purchases
A number of mortgage blogs have been reporting about a new Fannie Mae fee for condo purchases. Locally, Rhonda Porter noted on her Mortgage Porter blog the new add-to fee will be an additional 3/4 percent (0.75%) for loans with an LTV greater than 75% (25% or less in equity). Thus, even for buyers coming up a 20% down payment there will be an additional 3/4 percent fee added. The new Fannie Mae fees will be effective as April 1, 2009, though buyers may see those fees earlier depending on their lender.
The fee can be paid up front or priced into the interest rate. For example, on a $350,000 condo loan, buyers with less than 25% down payment will have to come up with an additional $2,625 up front, or if priced into the rate, will see an increase in the monthly payments by about $165. That’s quite a difference.
To avoid the fee buyers should consider either buying or locking-in rates now. The fee does not apply to loans with amortization terms of less than 15 years or to FHA loans.
Update 1/16: I’m hearing from a few loan officers now that lenders have begun assessing the new 0.75% condo fee so locking may no longer be helpful.
Hi Ben, I’m seeing lenders implementing the fees as of loans locked after this Friday. This impacts refinances too.
are these just FHA loans?
Me – the new fee applies to Fannie Mae conventional loans for condos, it doesn’t apply to FHA as FHA has its own guidelines.
25% down?? It’s hard enough for people to put 20% down. Ya best of luck to Fanie Mae, these condo’s will be sitting on the market for even longer. I will feel bad for people who are already living somewhere paying more and more for HOA fees because people who CAN buy can’t afford to put 25% down. What a joke!