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Fannie Mae and Freddie Mac’s New Mortgage Fee, Explained

The Federal Housing Finance Agency (FHFA) made changes to the fee structure of conventional mortgages guaranteed by Fannie Mae and Freddie Mac. These changes effectively lower the fee gap between borrowers with high credit scores and those with low ones.

According to Money, the change is part of a government initiative to make homeownership more affordable to underserved communities and first-time homebuyers, but critics say it disadvantages middle-income borrowers who are more financially prepared to buy a house — and less risky to lend to.

While low-income borrowers and those with credit scores below 680, as well as first-time homebuyers, will likely see lower monthly costs going forward, the changes could also make it harder for borrowers with good — but not great — credit and income to purchase a home. Fees also increased for borrowers who make larger down payments, those who apply for a cash-out refinance and those who buy a second home.

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