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Over the past few weeks, there has been a lot of noise about the home loan fee changes being implemented by Fannie Mae & Freddie Mac. Many are saying that bad credit borrowers will be getting better loan terms than good credit borrowers and these good credit borrowers are being punished. Read below as we help you sift through the noise…
Fees on home loans essentially increased across the board as of May 1, and that change applied to borrowers of all credit scores. Lower credit score borrowers saw fee increases just like higher credit score borrowers.
However, it is true that when compared to the costs of loans prior to the May 1 change, higher credit score borrowers are now seeing higher incremental increases in costs versus lower credit score borrowers. In other words, the cost increases to higher credit score borrowers went up more than that of lower score borrowers.
In response to the media and news proclaiming lower score borrowers are better off, the Federal Housing Finance Agency said “Higher credit score borrowers are not being charged more so that lower score borrowers can pay less. The updated fees, as was true of the prior fees, generally increase as credit scores decrease for any given level of down payment.” In other words, having a higher credit score will still get you better mortgage terms than you’d achieve with lower scores. So don’t go sabotaging your credit in the name of improved financing terms!
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