Costs Will Increase For Buyers Regardless Of Credit Worthiness

Beginning April 1, 2011 Fannie Mae will implement a higher interest rate to borrowers even if they have a perfect credit score for all loans term over 15 years. Freddie Mac will change its fee structure changes on of March 1st.

Loan Level Price Adjustment
Borrowers will be charged either a higher interest rate derived from the size of the down payment or how much equity is in their home for refis.

Banks Get Conservative
Risk vs. Reward

New home buyers shopping for mortgages will face these fee increases

1. Someone buying a home with credit OVER 740 with 25% or lower down payment will now pay approx .125% more in rate.
2. A borrower with a credit score over 740 refinancing to 80% of the value of their home and taking out additional cash can expect to pay an additional .25% higher in rate.
3. Anyone buying or refinancing a condominium (excluding detached condos) with less than 25% down payment (or equity) can expect an increase in rate of almost .5%
4. Borrowers without larger down payments will see slightly higher rates.
5. Buyers with lower credit scores, they can expect much higher rates.

Fannie and Freddie have learned their lesson. The politics of housing has changed from a congressional mandate to make home ownership more accessable, even to the unquaalified, to a rational and more profitable system. They/we lost a bundle and they are looking at another bad year with foreclosures expected to rise again in 2011.

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