Paso Robles Real Estate

Fannie Mae & Freddie Mac Tightening Lending Criteria

To all of you prospective homeowners who have been sitting on the fence, now is the time to purchase a home and quickly!  Home prices are the lowest they have been since 2003, interest rates are phenomenal, and Fannie Mae & Freddie Mac are raising their mandatory fees, toughening credit score criteria and down payment rules as of April 1.  If you find a home immediately and do a 30-day escrow, you might get in under the wire.

Most major lenders are already tacking on the higher fees.

Under Fannie & Freddie’s new guidelines, even if you have very good FICO scores, if you can’t come up with a 30% down payment, there will be what they call a “delivery” – aka penalty — “fee” at close of escrow.

A buyer with a FICO score of 699, even with a 25% down payment, will get hit with a 1.5% delivery fee.  A buyer with a FICO score between 700 and 720 will get hit with a 3/4% delivery fee.  Even someone with a 739 FICO score, heretofore considered “A” credit, will get hit with a 1/4% delivery fee.  Remember, if you are paying a 1% delivery fee on a $500,000 mortgage, that equates to bringing $5,000 more to the table at close of escrow.

Buyers of condominiums who cannot come up with a 25% down payment will have a 3/4% add-on penalty regardless of how good their credit is simply because it is not a detached single family residence.

It looks like the only way to avoid these penalties is to get an FHA loan, which may or may not result in a higher interest rate.  Federal Housing Administration mortgages allow down payments as low as 3.5%, and credit scores are not as critical as those required by Fannie Mae and Freddie Mac.

If you plan to purchase a home now, be sure to contact your mortgage professional immediately to discuss lending options…

If you would like to search the MLS for listings in and around Paso Robles, visit my website. If you have any real estate questions or general questions about Paso Robles or San Luis Obispo North County, please contact me via email or call me at (805) 235-0234 for more information.

It starts with a dream…

Tags: delivery fee, Fannie Mae, Feddie Mac, Federal Housing Administration, FHA, FICO, home loans, interest rate, paso robles