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Lower Credit Scores = Higher Rates
Mortgage loans delivered to Fannie Mae are about to become even more discriminatory toward borrower credit scores.
On April 7th, 2008, investors that sell loans to Fannie Mae will announce the following updated schedule:
- Scores above 720.............No rate adjustment*
- Scores >680, <719.....0.125% rate adjustment*
- Scores >660, <679.....0.500% rate adjustment*
- Scores >640, <659.....0.750% rate adjustment*
- Scores >620, <639.....1.250% rate adjustment*
- Scores <620..............1.375% rate adjustment*
*All quoted rate adjustments are estimates based on underlying, pre-determined wholesale pricing adjustments.
What does this mean? Pre-qualifying for a home early in the home buying process is even more important than before. Since credit repair can take one to three months or more to complete, an early start could save thousands of dollars on a mortgage.
Alternatives: Rather than accept a higher interest rate, buyers with lower credit scores can ask sellers to pay the additional "points" necessary to buy down to the best possible rate.
Additionally, FHA has announced much fewer credit scoring adjustments. FHA interest rates will start to be affected once their score drops below 620 and will go as low as 550.
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*Payments are based on a loan amount of $200,000. Jumbo payments are based on a loan amount of 500,000. Payment difference is calculated as compared to the 30 year fixed payment. Rates assume credit score >=720 and 20% down payment. This information is intended for Real Estate Professionals only. No APR has been calculated. Rates quoted are estimates and are subject to change without notice. For an up-to-date loan quote, please contact our office.
Until next time,
Blair G. Weed | Mortgage Planner/Partner
Meridian Lending Corporation
9362 Teddy Ln, Ste 201 | Lone Tree, Colorado 80124
888.966.1004 | 303.407.0100 | 303.407.0101 fax
www.GetLoanFirst.com
