Home loan fees increase on April 1st, 2011 for any borrower with less than 30% down payment or equity and less than a 720 credit score.
Beginning on April 1st, all loans sold to Fannie Mae will cost the borrower and extra .25% to .50% across the board.
The actual term for these fees are called Loan Level Price Adjustments, or LLPA’s.
Fannie Mae already enforces a .25% fee on ALL loans called an Adverse Market Delivery Charge. There’s no change to this fee.
There are also pricing adjustments based on loan to value and credit score. This is where we’re seeing as high as a .25% jump in cost to the borrower from 70% to 80% loan to value and as much as .50% above 80%. See red outline below.
Bottom line here is that if you are buying or refinancing a home and take out a home loan of $300,000 – you need to come up with an extra $750.
I know this isn’t an I-need-a-second-job-to-pay-for-it increase in closing costs, but it is significant if you’re scraping together the money to try to buy your first home.
So, here we go again. Last year in April it was all about the rush to get your offer accepted to qualify for the First Time Homebuyer Tax Credit.
This year you have to try to meet an April 1st, 2011 deadline to avoid having your closing costs shoot up a few hundred dollars or more.
If you are applying for an FHA, VA or USDA home loan, the loan level price adjustments do not apply.
FHA already had their price increase on October 4th, 2010 – so they’re covered…for now.
If you’re in the process of trying to buy a home now – make sure you have this conversation with your loan officer to see if the loan you are applying for falls into this new guideline.
If you’re not sure – feel free to leave a comment below, shoot me an email or give a ring on my cell (listed below).