Scott Kinne First Heritage Mortgage

Scott Kinne's Mortgage information Blog

  • About Scott
  • Testimonials
  • Resources
    • First Time Home Buyer Tips
    • First Time Home Seller Tips
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Affordable Credit Repair
    • Interest Rates
    • Loan Programs
    • Loan Process
    • Loan Checklist
    • Mortgage Glossary
    • Mortgage FAQ
  • Main Website
  • Contact
  • Apply

Your Credit Score Doesn’t Cost You Today, But In Three Months It Could Cost You Plenty

December 6, 2007 by Scott Kinne

Fannie Mae and Freddie Mac are adding interest rate adjustments based on credit scores effective March 1, 2008

Credit scores are the best predictor of how a homeowner will pay on a mortgage, so it’s no surprise that credit scores will play a bigger role in mortgage financing in 2008.

Actually “that date” is more clearly defined. It’s March 1, 2008.

For loans closing on or after March 1, 2008, Fannie Mae and Freddie Mac will subject the bulk of their mortgage products hefty fees when the loan-to-value exceeds 70%.

Credit scores will determine the amount of the rate adjustment.

  • Credit scores between 660-679: 0.750% of loan size in fees
  • Credit scores between 640-659: 1.250% of loan size in fees
  • Credit scores between 620-639: 1.750% of loan size in fees
  • Credit scores below 620: 2.000% of loan size in fees

For example, a person with a $250,000 mortgage rate would face a “credit-based fee” of $3,125 just because they carry a 650 credit score. It would jump to $4,375 for a 635 credit score.

Alternatively, this fee can be “financed” into the mortgage instead of paid as cash. The general rule is that for every 1.000% in fees, you can exchange it for a 0.250% increase to rate. This is just a guideline, of course — every mortgage lender has its own pricing scheme.

Because the credit score adjustment is not into effect for loans closing prior to March 1, 2008, there is plenty of time to be proactive if you think you’ll trigger the new rule.

If you are planning to purchase a home on or after March 1, 2008, it would be prudent to have your credit scores checked as soon as possible. If your scores are below 680, or teetering on the edge, take ownership of your credit and start working to improve your score.

A terrific source of non-biased credit scoring information is myFICO.com.

Filed Under: Uncategorized

Scott Kinne

Contact Scott

Vice President, Senior Loan Officer
NMLS ID #182351
Office: 703.293.6146
Mobile: 571.237.6241
Fax: 571.317.2478
skinne@fhmtg.com

Licensed In Maryland, Virginia, Washington D.C., West Virginia
  LOAN APPLICATION
  FREE RATE QUOTE

Connect with Me!

Sign Up For My Free Newsletter

Categories

Recent Posts

  • S&P Case-Shiller Home Price Indices: Home Prices Fall In November
  • Is It Worth It to Put More Than 20 Percent Down?
  • What You Need To Know About A Closed-End Second Mortgage
  • What’s Ahead For Mortgage Rates This Week – January 30, 2023
Equal Housing Lender
nmlsconsumeraccess.org
First Heritage Mortgage, LLC, Company NMLS ID #86548

Our Location

3201 Jermantown Road
Suite 800
Fairfax, VA 22030
Business: 703-293-6146
Cellphone: 571-237-6241

Copyright © 2023 · Powered by MySMARTblog