The Federal Housing Finance Agency (FHFA) announced earlier today that it is rescinding the debt-to-income (DTI) loan level price hit adjustment (LLPA) that was announced in January of this year. Previously, people with a debt-to-income ratio higher than 40% with a loan-to-value greater than 60% would have an additional price hit to their interest rate. This price hit makes it even more challenging for someone who is pushing the DTI limit to remain under the 40% number to avoid having either a higher rate or paying more for the same rate because of the LLPA. The additional price hit for DTI ranged from 0.25%-0.375% depending on the loan to value/how much equity is in the transaction. On a $400,000 loan, this would be an additional cost of $1,000 to $1,500 if paid as “points” instead of having it priced into the interest rate. [Read more…]
BREAKING NEWS: FHFA Rescinds the DTI Price Hit (LLPA)
Price Adjustments coming soon to Conforming Mortgages
Last week, the FHFA (Federal Housing Finance Agency) announced changes to how conforming mortgages are priced with loan-level price adjustments (LLPAs). Some borrowers will find improved pricing where others will have to pay more in fees. The fees are typically incorporated into the interest rate for the mortgage.
From Fannie Mae’s Lender Letter dated January 19, 2023:
“We are implementing additional changes to our LLPA framework that represent the next step in our effort to increase support for borrowers historically underserved by the housing finance market…”.
Mortgage Rates for Second Homes and High Balance Mortgages are Going UP
The FHFA announced today that the pricing of mortgage interest rates for second homes or high balance mortgages will be more expensive. This impacts conventional mortgages (Fannie Mae and Freddie Mac) and is effective for loans that are delivered on or after April 1, 2022 – i.e. I expect to see the price increases to start happening soon. [Read more…]
Lenders Increasing Extension Fees
I’m receiving notices from a couple of the lenders we work with that they are temporarily increasing rate lock extension fees due to Fannie Mae’s increased guarantee fees (LLPA) that will hit us in 2014. An extension fee is an additional cost that may be charged in order to keep a rate locked when the rate lock is expiring.
New Conforming Price Adjustments for Mortgage Rates
UPDATE: DECEMBER 23, 2013: Incoming Director of the FHFA, Mel Watts has announced that he will delay the increase to conforming price adjustments (aka LLPA or guarantee fees).
This week Fannie Mae revealed conforming price adjustments (LLPA) which will increase the cost for mortgage rates in 2014. This complied with the Fed beginning to pull back on their bond buying program will certainly cause mortgage rates to trend higher.
Is 714 a Good Credit Score for Buying a House?
This is a term someone entered into a search engine, like Google, who wound up on my blog. “Is 714 a Good Credit Score for Buying a House?” is a fair question. Just a couple years ago, having clients with credit scores 700 or higher was considered “excellent”. In fact, previously credit scores of 680 or higher were considered good. Now with conventional loans, we have several brackets based on credit scores and loan to value. Many lenders are adopting this with FHA loans too.
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