Exhilaration permeates the process of purchasing a Chicago condo or your dream home. However, the pathway towards becoming a homeowner lies riddled with fees for multiple reasons, and a few of these fees may be more exorbitant than others, such as Private Transfer Fees. Before you sign your name to a mortgage or rental agreement, take the time to understand what these fees reference, their average cost, and how recent government regulations impact Private Transfer Fees.
What Are Private Transfer Fees?
During construction, the developer uses his resources to acquire all of the necessary building supplies, contractors, and workers to complete the project, which reflect within the purchase price of the structure. However, some developers may ask for a fee for development with each subsequent selling of the property following completion.
How Much Are Private Transfer Fees?
According to the Federal Housing Finance Agency (FHFA), Private Transfer Fees routinely represent 1% of the home’s value and cover a period of 99 years. However, the FHFA recently sought to amend the processes of charging Private Transfer Fees when government-backed housing giants are involved.
Private Fees Changed for the Better.
In 2010, the FHFA began working on modifying how Private Transfer Fees are charged and set forth a precedent for the housing market. With a final ruling in 2012, housing giants, Freddie Mac, Fannie Mae, and other Federal Home Loan Banks, were effectively stripped of the ability to charge Private Transfer Fees when the fees do not improve the community, and therefore, directly benefit the homebuyer. As a result, the majority of Private Transfer Fees were halted on most Chicago real estate transactions.
Private Transfer fees may go by many names, including Covenant Private Transfer Fees or Property Development Securities. However, the 2012 ruling by the FHFA guarantees that any such fees may not be charged by a federally-backed bank unless the fee does not result in lost equity. If you’d like to learn more about these fees or a home without such fees, contact us today, and a Chicago realtor will be happy to assist you.