BG Wrote:
“I’m going to assume that a $417K mortgage loan on the *new* 1%/3% FF loan program costs at least $12K to close. Please correct me if I’m wrong on this”
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Of course there is a ‘cost’ for the program that is a fixed % of the loan amount.. If the lender needs to make up 2% of the loan to give back to the borrower + some other fees, it certainly could be $12K on a $417K loan, however the $12K is not paid in cash, it just translates to a higher rate for the life of the loan, no cash from borrower.
If the payment is affordable, most people don’t care that it will cost them $30K +/- over the life of the loan,they only care about their monthly payment.
Even at 4.00%-4.25% with the kitchen sink rolled in, it is still near historically low rate for a 30yr fixed loan.
I’m surprised that FNMA approved this program but their goal is to generate new loans and collect fees.
They assume a certain level of default just as credit card issuers do.
There’s enough anticipated profit to justify the loss ratio.
Inflating the bubble is in the best interest of ‘the system’ ~People are happier with perceived wealth.
