Big Changes to Mortgage Fees

The Federal Housing Finance Agency (FHFA) recently announced changes to Fannie Mae’s and Freddie Mac’s fee matrix.

Referred to as Loan Level Price Adjustments (LLPAs), they use a pricing matrix to determine your loan fees and interest rate based on your credit score, the loan-to-value ratio, occupancy (owner vs non-owner occupied homes), and most recently, your debt-to-income ratio.

The upside: The financial penalty for having a lower credit score and putting less money down has been reduced.

The downside: If you have a credit score between 720-759 and are putting down 15-20% you'll be paying a slightly HIGHER fee. 

Why is FHFA doing this? “These changes to upfront fees will strengthen the safety and soundness of the Enterprises by enhancing their ability to improve their capital position over time. By locking in the upfront fee eliminations announced last October, FHFA is taking another step to ensure that the Enterprises advance their mission of facilitating equitable and sustainable access to homeownership.”​​ - Director Sandra L. Thompson

When does this go into effect?: May 1, 2023

Should you worry? Probably not. I spoke to one of my preferred lenders and he said that his company is already looking for ways to work the increased fees into the loan which may mean a slightly higher interest rate to offset the costs. 

If you have less than stellar credit this could be a good thing as your fees will decrease.

Read more about the changes here and here.