Many Are Paying More for Mortgages

In response to the current credit markets, the Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac have implemented new credit score (FICO score) and Loan-To-Value (LTV) driven pricing. This makes pricing a loan and comparing pricing on conventional conforming loans even more difficult. Someone with a credit score as high as 719 will pay a premium to obtain a mortgage.

The following are the new price adjustments for vanilla conforming thirty year fixed rate mortgages:

LTV 60.01% to 70%
Credit Score 640 -719 is a 0.500% cost
Credit Score 620 - 639 is a 0.750% cost.

LTV 70.01 or More
Credit Score 680 to 719 is a 0.500% cost
Credit Score 660 - 679 is a 1.250% cost.
Credit Score 640 - 659 is a 1.750% cost
Credit Score 620 - 639 is a 2.500% cost

These costs are to the discount points, one discount point is equal to 1% of the loan amount, and can be translated into the actual rate. Remember the less upfront points the higher the note rate.

This means it is wise to consult with a knowledgeable mortgage professional early on in the purchase or refinance process. The mortgage professional may be able to provide some advise to gain a few points to a FICO score, which means saving thousands of dollars.

Paul Cantor is a mortgage planner in Central Virginia. He may be reached at (804) 433-1510 or at www.PaulCantor.com