Home Buyers With Great Credit Must Subsidize Those With Bad Credit

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es, you read the headline correctly. If you are a home buyer with great credit, a new federal law that will take effect on MAY 1, 2023, has new fees attached to your mortgage. Fees that will help subsidize risky buyers with bad credit.

A little-noticed revamp of federal rules on mortgage fees will offer discounted rates for home buyers with riskier credit backgrounds — and force higher-credit homebuyers to foot the bill, The Post has learned.

Fannie Mae and Freddie Mac will enact changes to fees known as loan-level price adjustments (LLPAs) on May 1 that will affect mortgages originating at private banks nationwide, from Wells Fargo to JPMorgan Chase, effectively tweaking interest rates paid by the vast majority of homebuyers.

Oh yeah, this REALLY slipped under everyone’s radar. And the devil is definitely in the details. Home buyers who have great credit scores will see an additional fee leveraged on their mortgage, while riskier buyers with bad credit or even NO credit will get fabulous discounts! 

Specifically those with high credit scores who pay 15-20% down will get slammed with the highest rate plus a 1% surcharge. What does this mean for a mortgage when a home is purchased with good credit? 

“When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate,” the Post reported in reference to buyers with higher credit ratings. “On a $400,000 loan with a 6 percent mortgage rate, that buyer could expect their monthly payment to rise by about $40.”

That’s nearly $14,400 over the life of a traditional 30-year mortgage.

You can damned well bet the Biden Administration will spin this as a ‘it’s only a quarter percent fee charged’ thus implying it’s no big deal. Except $14,000 over the life of the mortgage IS a big deal as that is money that could’ve been used elsewhere such as paying down the principle, home repairs or put into savings!


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