Fannie Mae is implementing NEW and IMPROVED upfront fees which will impact interest rates – even for the most prudent credit conscious consumers. Beginning on or around March 1, 2014 Fannie Mae will be adjusting their Loan Level Pricing Adjustments making it more expensive for the majority of would-be homebuyers and home refinancers. Why “on or around”? Fannie Mae will charge these new and improved fees on mortgages they purchase from lenders on April 1, 2014. Therefore, lenders must begin passing this fee on to the ‘ol consumer in February or March, in effort to have those fees covered on loans closed and sold to Fannie Mae by April fool’s day.
Let’s take a look at the impact using a purchase price of $250,000 with 10% down payment and 700 credit score. Assuming rates remains at their current levels hovering right around 4.75% for a 30yr term.
December 2013 payment = $1173.71 @ 4.75%
April 2014 payment = $1225.10 @ 5.125%
That’s right, the increased fee that Fannie Mae will be passing on to lenders, in this example, translates to .375% higher rate resulting in a $51.39 increased monthly payment. And that’s IF rates remain the same…..which is doubtful as the Fed’s continue their tapering talks.
Now, the range between Fannie’s new fees vary considerably based on down payment percentage & credit score. There are 5 key combinations that you should be familiar with in order to communicate this back to your clients. They NEED to know what waiting 60 days will cost them.
I’d like to share with you the 5 key combinations – let’s carve out some time as early as possible. You’ll be equipped in less than 20 minutes – guaranteed. Email me Cole@coleholmes.com right now!
Here’s a direct link to Fannie’s new matrix https://www.fanniemae.com/content/pricing/llpa-matrix.pdf