Mortgage Rates in Diablo May Increase in the Near Future

Recently the Federal Housing Finance Agency, which is the regulatory body for both Fannie Mae and Freddie Mac, announced that another 10 basis point increase in guarantee fees (g-fee) will go into effect between November 1 and December 1, 2012. The increase in g-fees could lead to mortgage rates for home buyers in Diablo to jump in the near future. This is the second time g-fees have increased this year, with the last being in April.

The g-fee increase will result in Fannie Mae and Freddie Mac charging lenders more to guarantee loans. The increase will result in about 40 to 50 basis points in price to the lender which, in turn, will be passed on to the home buyer. The increase you will see in interest rates will vary by lender and borrower. We could see rate increases by 0.125 to .5 percent in the very near future.

A .5 percent increase in mortgage rates could have a strong impact on what a borrower would pay on a monthly payment. For instance, if the rate would increase from 3.5 percent to 4.0 percent it would raise the rate on a $200,000 loan by $57 a month.

Take advantage of low interest rates and buy now before the rates go up. If you are ready to sell or buy a home, contact me by email or call me, Brad Gothberg, at (925) 648-5326. I have been a real estate professional for 23 years and my qualifications include the production of over $105 million in sales within the past 5 years.

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