New Fees On Conforming Loans

“I KEEP HEARING ABOUT NEW LENDING STANDARDS THAT ARE NOW IN PLACE DUE TO THE SUBPRIME CRISIS. WILL THESE NEW STANDARDS AFFECT ME EVEN IF I HAVE GOOD CREDIT?”

Although it depends on several different factors (your credit score, the type of loan you’re applying for, etc.) the short answer to that question is yes, the new standards will affect all borrowers one way or another. Beginning March 1st, Fannie Mae and Freddie Mac added new credit score-based fees to all conforming loans. If you’re financing more than 70 percent of a home’s purchase price, the following risk-based fees will now apply:

• Credit scores of 660-679: Additional 0.75 percent fee.

• Credit scores of 640-659: Additional 1.25 percent fee.

• Credit scores of 620-639: Additional 1.75 percent fee.

• Credit scores of 620 or lower: Additional 2.00 percent fee.

Even if your credit score is above 680, though, you’ll still have to pay another fee from Fannie Mae and Freddie Mac. This new fee is a 0.25 percent “delivery fee” on all loans that the two mortgage giants back. With this fee alone you’ll be paying an additional $250 for every $100,000 borrowed. Of course, everyone’s credit situation and borrowing profile is different so check with your mortgage professional for more details. ∆