Increases in Cost of Mortgages Announced!
ATTENTION
I just got word that Fannie Mae and Freddie Mac are about to raise the cost of obtaining a mortgage! This is not a normal rate fluctuation we are talking about. What is being proposed and expected is that there will be a add-on “delivery fee” charged by Fannie and Freddie to accept a loan from the lender.
What I have been told to expect is that there may be a significant cost add on that would apply to any borrower that is borrowing over 70% of the property’s value and has a credit score below 680. The borrowers below this score with the higher LTV are in a class of borrowers that Fannie and Freddie are considering a bit more risky. When this becomes a reality it could change not only who can buy, but how much they can qualify for. It doesn’t matter what bank, lender or mortgage broker the loan is originated with, if it is your typical conforming (also known as Prime) mortgage loan, the delivery fee will apply.
In a letter posted on their website, Freddie Mac said they will be charging from .75% up to 2.0% depending on the borrower’s credit score for loans submitted with less than a 70% LTV and credit scores below 680.
The following table illustrates the rates and costs for a borrower with a loan amount of $300,000.
|
Credit Score |
Delivery Fee Rate |
Cost |
|
Below 620 |
2.00% |
$6,000 |
|
620-639 |
1.75% |
$5,250 |
|
640-659 |
1.25% |
$3,750 |
|
660-679 |
0.75% |
$2,250 |
So the long and the short of it is, if you have anyone on the fence, tell them to make a move NOW! Rates and programs will stay as great as they have been only so long! It’s time to make a move and get into that home they are only thinking about!
I will do my best to keep you updated as more infomation becomes available.
Thanks,
Ed