Home Loan Fee Structure Changes
Those changes took effect on May 1, 2023. The fee structure changes do NOT affect FHA mortgages directly, but the spirit of these changes is already at work in the FHA home loan program in recent years.
Is this part of a larger push to make homes more affordable for those traditionally underserved by the mortgage banking industry?
New Home Loan Fees for Fannie Mae and Freddie Mac
CBS Miami reports, “For those with lower credit scores, the fee changes will reduce the penalty for having a low score. For those with higher credit scores, more price tiers have been put in place, which in some cases may increase fees.”
Some disagree, but in essence, these fee changes “will still cost the home buyer with the lower credit score more.”
CBS published an example to demonstrate how the new fees work. The difference in assessed fees “is about $4,000 more for a buyer with a 640 credit score than for a buyer with a 740 credit score, based on a $300,000 mortgage.”
These changes are for conventional loans eligible to be purchased by Fannie Mae or Freddie Mac; they do NOT apply to FHA home loans. But that does not mean the FHA loan program hasn’t experienced some restructuring.
FHA Loan Price Changes
In February 2023, the FHA and HUD announced a restructuring of the FHA Annual Mortgage Insurance Premium (MIP), reducing the fee “from 0.85 percent to 0.55 percent for most homebuyers seeking an FHA-insured mortgage, which could mean an estimated savings of $678 million for American families in aggregate by the end of 2023 alone.”
The savings could benefit more than 800 thousand borrowers, saving them roughly $800 a year. These changes in lending programs seem to mark a shift toward helping more people become homeowners.
HUD Says Empowering Homeowners Is Key
HUD Secretary Martha Fudge agrees that a national shift is needed. She is quoted in a HUD press release about the lower mortgage insurance rates.
“For this country to truly succeed, all Americans must have access to opportunity. That means expanding access to wealth-building and home ownership,” the HUD Secretary says, adding, “Today, we are building on the steps we’ve taken to make homeownership more affordable, and HUD is acting to ensure people feel comfortable purchasing a home as they build toward their future.”
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