![]() 6 And a group of 18 Republican Senators also sent a letter to the FHFA to express their concern that the new LLPA guidelines could hurt the housing sector. House Republicans are working on a bill to repeal the mortgage fee changes. In the wake of a three-percentage point increase in mortgage rates, now is not the time to raise fees on home buyers.” 5 If you’re scratching your head about how these mortgage fees are structured, you’re not alone.Īccording to a statement from National Association of Realtors President Kenny Parcell, “Fees are raised on some borrowers with good credit scores and moderate down payments, hitting middle-wealth home buyers. Yep, you read that right! If you put down less than 20%, your fees gradually get smaller the less you put down.įor instance, the fee for a borrower with good credit (720) and a 15% down payment is 0.5% higher than the fee for a borrower with good credit and only a 5% down payment. Borrowers with smaller down payments will now have lower fees across the board. In addition to changing its credit score guidelines, the FHFA also changed its loan-to-value rules. But the FHFA’s new rules narrow the gap between what people with high and low credit scores pay.Ī buyer with good credit and a 15–20% down payment should expect their interest rate to be about a quarter of a percentage point higher under the revised LLPA guidelines. Now, to be clear, if two home buyers have the same size down payment but different credit scores, the one with the lower credit score will pay a higher LLPA. The FHFA calls these mortgage fees loan-level price adjustments, so let’s take a look at how they work.ĭave Ramsey recommends one mortgage company. Even though we’re not fans of I-love-debt-whoops-credit scores, we see how it would sting to pay fees for having good credit. If it does, that’s a clue you might not be in the best financial position to buy a house.īut still. And the truth is, an extra $30 or $40 a month shouldn’t make a huge impact on your home-buying decision. The new mortgage fees basically work out to a $10 difference (either higher or lower depending on your credit score and down payment) for every $100,000 of home loan value. That translates into a monthly mortgage payment that’s about $40 higher under the new structure. In fact, a home buyer with a 740 credit score and a 15–20% down payment will have an interest rate about a quarter of a percent higher than they would have before the fee change. Yep, the FHFA’s mortgage rate pricing penalizes home buyers who have worked hard, handled their money like responsible adults, and saved for a down payment. And how did it decide to cover the cost of helping riskier borrowers get loans? It raised fees on people with good credit and larger down payments. ![]() On May 1, the FHFA changed its mortgage fee structure for Freddie Mac and Fannie Mae (government-funded mortgage lenders) to make it easier for borrowers with low credit scores and low down payments to get a loan. If you’ve got a paycheck and a pulse, we’re gonna help you get a house! ![]() Federal Housing Finance Agency (FHFA) is sounding like a used-car salesman these days.
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