Friday, March 7, 2008

FANNIE MAE INCREASES CREDIT SCORE REQUIREMENTS... AGAIN

The latest changes being implemented by Fannie Mae, which went into effect March 1, placed additional hurdles before consumers with certain credit scores in the process of obtaining a mortgage loan.

In the past, mortgage loan applicants with credit scores between 620 and 850 generally received the same interest rates on conventional loans. The new guidelines specify that a lower LTV must be met for loan applicants with credit scores between 620 and 679, or an interest rate surcharge will be added to the rate. The new LTV is 70.01%.

The interest rate surcharges are staged as follows:

Credit Score / Interest Rate Surcharge To Quoted Rate
680 to 850 ... no increase
660 to 679 ... .125% increase
640 to 659 ... .25% increase
620 to 649 ... .375% increase

The home buyer with a credit score between 620 and 679 can still qualify for a conventional loan; however, they will be required to pay a higher interest rate if they do not have equity or available funds for a higher down payment to achieve the required LTV.

Last week, Freddie Mac announced changes, effective June 1, to their loan policies that will place further restrictions on LTV and credit scores, which will have the effect of increasing the cost of borrowing for a greater number of loan applicants.

Would you benefit from a FREE credit consultation with a Certified Mortgage Planner (CMP)? What if you could find out how to add 50 extra points to your credit score? How much would that save you in financing costs over the next 10, 20 or 30 years?

My team is COMMITTED to helping you attract the best rate and terms for your home purchase.