Chickens Coming Home to Roost, Higher Fees for Home Loans

If you plan to buy or refinance a house, you can expect to pay higher fees to mortgage companies. In Kenneth Harney’s article Housing boom’s hangover to give home buyers a dire credit headache, he states that Fannie Mae and Freddie Mac are imposing significant increases in fees for borrowers who have less than 30% down and with credit scores below 680.

Previously, loan applicants with scores above 620 could assume they would receive a good rate. Under the new policies, that go into effect March 1, 2008, where down payment amounts are less than 30%, if the borrower’s credit score is less than 620, a new 2% fee is charged. If the score is between 620 and 639, a fee of 1.75% is charged, between 640 and 659, the surcharge is 1.25%, and between 660 and 670, the fee is .75 to 1.00%.

Some major lenders have already begun imposing new surcharges on applicants. Charges by MGIC Corp., for example, when a down payment is less than 30%, would raise an annual premium by $1,920 to $3,400 on a $200,000 mortgage.

The chickens are coming home to roost from the housing boom and the loan scandal, and they’re not happy campers.

Info on Terry’s Book

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