Buffalo, NY (WBEN) - It's difficult to get your arms around a new Biden administration policy that could mean you will have to pay more on your mortgage to help those with worse credit who are also seeking a mortgage.
Starting May 1, fees for home loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan-Level Price Adjustment matrix. Penalties for having a lower credit score will be smaller than it was before, while people with a higher score will see their fee rate increase.
The changes could mean people with good credit may people with good credit could pay $30 - $40 more per month on their mortgage, a figure that could add up to over $10,000 over the term of a mortgage.
"I think (President Biden) probably couldn't have picked a worse time," says Peter Hunt, Chief Operating Officer of Hunt Real Estate. "The mortgage market is a mess right now, and it's going to be a brutal year for the mortgage business. Everybody, the banks, credit unions, individual lenders, brokers and bankers. And to put this on top is just a ridiculous burden," says Hunt.
Hunt says it's very difficult to buy a home today because inventories are very low. "Often you're competing with other buyers for it, and obviously, we want to give everybody an advantage if it's possible, but to create a disadvantage is, is in my mind, only going to hurt ultimately sellers, because it's all a matter of affordability," says Hunt. He believes those doing the right thing will end up being penalized. "To help someone else out, I suppose is a nice gesture, but it's certainly to penalize people that are doing the right things. I just don't see what the point of that is," notes Hunt, thinking there's a better solution.
Hunt's advice is the same as it has always been: find a good advisor, and work with them. "If you've got a credit issue, work to resolve that credit. It's not impossible. We work with people every day to help them get their credit, in shape so they can buy a home," says Hunt.
Vienna Laurendi, President-elect of the Buffalo Niagara Association of Realtors, says this is a relatively new issue. "From what I understand, they may be trying to reorganize how folks are qualified for mortgages."
Laurendi says she wants to see how things roll out before she gives advice to homebuyers.
This was first reported by the Washington Times.
