How the US is subsidizing high-risk homebuyers — at the cost of those with good credit

[GON]

Under the new rules, high-credit buyers with scores ranging from 680 to above 780 will see a spike in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.

"It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have,” one worried Arizona-based mortgage loan originator told The Post.

How the US is subsidizing high-risk homebuyers — at the cost of those with good credit

Experts say an “unprecedented” overhaul of mortgage fees would result in higher payments for most buyers.

nypost.com

 

[Vil_Riker]

What will happen is the mortgage fees will go up for most of the borrowers, and the high risk borrowers will be denied. The end result - higher fees for everyone, and higher margins for the mortgage initiators.

This is a classic tactic of redirecting the attention to groups with the least bargaining power.

 

[Pew]

On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.

A whole $40/month on a $400k house is nothing more than deciding to not eat McDonald's for one night as a family.

 

[wpod]

On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.

A whole $40/month on a $400k house is nothing more than deciding to not eat McDonald's for one night as a family.

Over 30 years that $40.00 per month adds up.

 

[KGMtech]

Slightly off the topic: The biggest problem that nobody wants to discuss right now is for everyone with a large house, who is going to be able to afford this category of home in 15 years? IF the age group 20-29 right now can't get into RE, then what group is going to be needing your large house when you want to downsize?

 

[Cujet]

Over 30 years that $40.00 per month adds up.

To like $14,000+

That's not nothing. And quite simply, it is inappropriate for central planning to manage my transactions this way. Furthermore, I'm not at all sure the fedgov has the constitutional authority to redistribute wealth via the banking system.

 

[Vercingetorix]

Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%.

Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.

Seems like the lower credit score still pays more.

 

[Skippy722]

You also have a higher fee if you put more money down.

 

[tmorris1]

On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.

A whole $40/month on a $400k house is nothing more than deciding to not eat McDonald's for one night as a family.

Why should it be any increase? Sick of penalizing people for doing the right thing.

Seems like the lower credit score still pays more.

But not as much as it should because the person with the good credit score has to share the cost.

 

[jeepman3071]

Slightly off the topic: The biggest problem that nobody wants to discuss right now is for everyone with a large house, who is going to be able to afford this category of home in 15 years? IF the age group 20-29 right now can't get into RE, then what group is going to be needing your large house when you want to downsize?

Exactly.

 

[Barkleymut]

no reason to pay ANY fees on a mortgage, at least not in a state where Cap Center operates.

 

[wings&wheels]

"central planning"

key words

 

[mk378]

If you have a lot of money to put down, but can get approved at 95% LTV, take that loan then pay it down right away. Likely though a lower LTV loan is a lower APR that offsets the fee.

 

[K.Aoi]

To like $14,000+

That's not nothing. And quite simply, it is inappropriate for central planning to manage my transactions this way. Furthermore, I'm not at all sure the fedgov has the constitutional authority to redistribute wealth via the banking system.

Once again, blaming the wrong group of people. Not the predatory banks and hedge funds who sent us into the last recession and will inevitably do so again because of corporate greed. Always the gov and poor people's fault.

 

[Astro14]

OK. lock time. Political comment made, bait taken, political rant ensues. Multiple posts deleted.