BOSTON – Changes in the mortgage industry could spell bad news even if you have good credit.
Beginning May 1, some people with higher credit scores may actually end up paying a higher fee while those with lower scores will pay less.
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“It’s really a big change,” explained mortgage loan officer and credit score expert Al Bingham. “It’s going to hit the consumer hard when they go to apply for a mortgage.”
The changes are part of the federal government’s effort to provide equitable access to home ownership.
According to Bingham, it comes down to fees that lenders pay back to federal programs that back the mortgages. For some first-time homebuyers those fees are often rolled into a higher interest rate paid by the consumer.
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Here is what it will mean for first-time homebuyers who fit certain income guidelines.
For a homeowner with a $500,000 purchase price who puts down the minimum down payment, a person with a 660 credit score will get a rate of about 6.25% while a buyer with a 740 score will pay 6.5%.
The changes will also make it more expensive for borrowers to refinance and to pull equity out of their homes to pay off consumer debt.
