Buyers with Fannie Mae-backed loans will face higher borrowing costs and interest rates, even if they have a perfect credit score, starting on April 1. Fannie Mae is instituting a loan-level price adjustment on several mortgages, which is a fancy way of saying they are going to charge borrowers more fees. The fees will include higher interest rates based on the down payment amount (or the amount of equity in their home if they’re refinancing) as well as the borrower's credit score.
Previously a buyer with a 700 credit score and a $160,000 mortgage who was purchasing a $200,000 home might have paid an additional $800 in these fees. That cost will double on April 1. Those who don’t have large down payments or who have low credit scores will see even higher rates.
For example, a buyer with a credit score over 740 who has a 25 percent or lower down payment will now pay about 0.125 percent more in interest. Any borrowers of a condo (excluding detached condos) who have less than a 25 percent down payment will face an increase of nearly 0.5 percent.
If you are considering buying with a Fannie Mae-backed loan, you should definitely do it before April 1.
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