Mortgages are likely going to get pricer, thanks to a recent surcharge from Fannie Mae.
Fannie Mae, which purchases mortgages from lenders, is adding the charges to loans of more than 70 percent of the home's value. The amount varies with credit score. Loans with scores below 620 will be slapped with a 2 percent charge; scores of 620 to 639, 1.75 percent; 640 to 659, 1.25 percent, and 660 to 679, 0.75 percent. The surcharges go into effect on March 1.
Many lenders will likely pass along the charges to borrowers. So this means that a lenders could charge borrowers with scores less than 620 a rate of 6.375 percent instead of 5.875 percent, said Sheldon Glatt, a certified mortgage planning specialist at SAS Consultants in Rockville Centre. That adds $100 a month to a loan of $300,000. The borrower could escape the charge by paying $6,000 upfront, but Glatt doubts many would do that.
"It will make it more difficult for [borrowers] to get loans for houses," Glatt said.
Fannie Mae is also adding charges of up to 0.50 percent on second mortgages, depending on loan-to-value ratio and credit score.
Fannie is taking these steps "to ensure that what we charge aligns with the risk we bear. These changes reflect the ongoing turmoil in the mortgage finance markets," according to a spokesman.