The government-sponsored mortgage-finance company stated in a memo last week that it will raise upfront fees to lenders on riskier home loans, including those for homebuyers with lower credit ratings and higher loan-to-value ratios. The changes will take effect March 1.
For borrowers with credit scores below 660, charges could rise to as much as 3.25 percent, while homebuyers with a FICO credit score of 740 or higher will see a 0.25 percent upfront fee. To offset an upfront fee of 0.25 percent, your lender could raise the rate of your 30-year loan by 0.05 of a percentage point, or about $10 a month on a $200,000 loan.
A friendly word of advice: Review your credit score now. Breaking that 740 ceiling could save you thousands in monthly payments.
For more insight on mortgages and credit scores see these AOL Real Estate guides:
- How to Get a Home With Bad Credit
- VA Loans: Homebuying Help for Veterans
- Mortgage Jargon in Simple Terms
How to Get a Low Mortgage Rate
- Secrets to Getting a Government-Backed Loan
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.