Recently, it’s been a popular topic in the national news regarding the Federal Housing Finance Agency’s (“FHFA”) decision to modify their Loan Level Price Adjusters (“LLPA’s”) for their Fannie Mae and Freddie Mac loans. National media reports that these recent changes that went into effect on May 1, will greatly cost more for those with good credit scores to obtain mortgage financing, while it will cost considerably less than those with much lower credit scores. However, these changes are not brand new and have been in place for the past 30-60 days. This FHFA news was first announced in January 2023.
“This is not new. The change didn’t happen on May 1, it happened on Feb. 1,” according to Jessica Thompson, Mortgage Consultant with Prosperity Home Mortgage. “Secondly, these changes did not affect customers with good credit and a good down payment. If it did, it would be small – less than a quarter of an interest rate.”
How does this affect my mortgage interest rate?
Thompson shares that “there won’t be any sudden spikes or drops in mortgage rates for higher versus lower credit score and down payment clients as some have suggested.” Home buyers who have a lower score and lower down payment will not get a better deal on a mortgage rate than those who have a higher credit score and down payment, contrary to what has been previously reported in some national news circuits.
In essence, “adjustments to high credit is minimal and impact to lower credit scores is substantial,” according to Thompson. This allows those with lower credit score to work toward the achievement to owning a home, which many would consider part of the American Dream. This also helps our economy tremendously since these Fannie Mae and Freddie Mac loans are sold back to the government in the secondary market.
Johnson County market update
This week in Johnson County there were 1061 active listings, and 1444 listings went under contract. (Source: Heartland MLS, May 4, 2023).
Additional resources and related articles
Is There Really a New, Unfair Mortgage Tax on Those With High Credit?
Fannie Mae and Freddie Mac’s New Pricing Is Not Punishing Those with Better Credit: Follow the Numbers
About Jessica Thompson, Mortgage Consultant, Prosperity Home Mortgage
About Maggie
Maggie is a ReeceNichols real estate agent and a third-generation realtor. It’s her passion to provide a professional and positive buying and selling experience to her clients. Maggie has been featured in Realtor.com, Apartment Therapy and in other publications. https://maggief.reecenichols.com/
Follow Maggie on Instagram and Facebook for updates on the local market.
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