In the President's speech to Congress and America last night, he promised to move forward with the economy, partly by loosening the purse strings of lenders who are frozen into inaction.
But a column this week by real estate expert Kenneth Harney described the new rules that Freddie Mac and Fannie Mae will impose, starting on April 1. Loan applicants will find that there are new loan fees added, even if they have high credit scores. Home buyers will be dinged with a "delivery fee" of anywhere from 1/4% to 1 1/2%, depending on their down payment and credit scores. Buyers of a condominium will pay a 3/4% loan penalty unless they come up with a 25 percent down payment, and duplex buyers with perfect credit who come up with a 50% down payment will still have to pay a point.
The agencies say that these fees counter higher risks, but as recently as two years ago, FICO scores in the high 600's were enough to qualify buyers for prime financing. Now bare minimum scores of 729-740 are needed to avoid these high fees, and are still not good enough for condo or duplex buyers.
FHA mortgages are fast becoming the only show ion town.
2 comments:
Are the % you quote here based on the value of the loan? So if we have a 700k loan we are looking at 7k (1%) in additional fees?
The percentage is based on your credit score, but a FICO score of under 700 could cost you that extra $7000 in your example. Currently, Realtors, mortgage bankers and brokers, who consider these fees counter-productive at a time when the housing market needs help, have begun lobbying congress and the FNMA and FMC overseers to scrap these add-ons. I'll let you know if there are changes.
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