MORTGAGE RATES ARE ON THE RISE COME SPRING!

As I was reading an article in The Wall Street Journal just the other day, I thought of all Americans with the dream of home ownership.  Is that dream going to be even harder to obtain? 

If you are a borrower with less then a huge down payment, without a perfect credit scores and thinking about purchasing a home. I would probably guess you might want to consider getting off the fence sooner then later..  Mortgage costs for borrowers are set to rise this coming spring 2014.

Fannie Mae and Freddie Mac, dominate the mortgage market, and are boosting fees that they charge Lenders.  We know Lenders usually tend to pass these costs onto the borrowers.  This means higher mortgage rates.  

For example, after the increase for a 30-year mortgage, a borrower with a credit score of 735 making a 10% down payment could pay fees totaling 2% of the loan amount, up from 0.75% right now.  An upfront fee of 2.5% can raise the mortgage rate by around 0.5 percentage points over the life of the loan.  

For borrowers making a 10% down payment with credit scores of 750, fees could increase to 1.5% from 0.5%; and for those loans with a borrower credit score of 775, the upfront fee could rise to 1% from 0.5%.

Borrowers with larger down payments could also see higher fees. For borrower with a credit score of 690 and a 25% down payment, fees are expected to rise to 2.25% of the loan amount, from 1.5%.

The Federal Housing Finance Agency, has stated that Fannie Mae and Freddie Mac, should raise fees in order to make non-government-backed lending more competitive, particularly for riskier loans.  The FHFA this month did announced the fee increases but didn’t provide specific breakouts for different borrowers.  I would say they are acting like private investors which do not operate with a government safety net to protect them against losses made from the purchases of bad loans.

So, ultimately home affordability will be on the decline for some borrowers.  This is derived from bad loans.  Borrowers that are a high risk will be paying higher fees.  If you are thinking of purchasing a home, you may want to consider purchasing a home sooner by taking advantage of today's Real Estate Market so there are no regrets later. 

.....as always contact me for assistance with all of your real estate needs
Carol Lusidia Morrow
619-368-6382
carolmorrow@century21award.com
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