Back in 2003 you saved tons of money when you refinanced your mortgage at 5.5%. Your current balance is $159,000 and you are geared up to take advantage of the historically low interest rates by refinancing again - You know you are set because you have good credit and 22% equity in your home; Right?
Please keep in mind that this also applies toward people who are looking to purchase a home and applies to Conventional Conforming home lending.
A call to your Bank and Local Mortgage Broker reveals a truth never mentioned in the media and throws you into shock when you learn that even with your good credit score and equity position, you will have to pay an EXTRA $1,193 in fees to get the best interest rate; The rate you have been sitting on the fence waiting for! Consider yourself lucky, as if your score (while still above average) were 699, the cost would DOUBLE to $2,386 . . . Not to add insult to injury, but the additional fee is over and above closing costs!
WHAT IN THE WORLD IS GOING ON! Well our friends Fannie Mae and Freddie Mac - the enormous quasi-government bodies we have all become to know, have been buying up mortgages from banks and wholesale lenders in mass quantities. I am sure that we are all aware of the HUGH risks and payouts we tax payers have absorbed over the past quarter; But perhaps you have not been brought up to speed on the direct effect consumes will have as the result. Fannie and Freddie have increased their fees DRAMATICALLY!
As the result of the increased fees placed on the Lenders by Fannie and Freddie, the lenders are charging more based upon RISK! The basis for the increased charges are credit scores, equity or loan to value, occupancy and whether or not a borrower is consolidating, purchasing or just refinancing their existing home loan. Furthermore, it is assumed that the better the borrowers credit score (above 720), and the more equity, the least likely they are to let their homes go into foreclosure. A lower score (719 and below) and less equity would suggest the latter.
Here is the bottom line; Unless your credit score is 720+ and have a least 25% equity, expect to pay more for your mortgage; Either in settlement fees, or interest rate. The lower the score, the more one will pay . . . In some cases, up to 3% more, in the event that their credit score falls below 660.
While you cannot do much to improve your equity position (without an outlay of cash), you can improve your credit scores DRASTICALLY within a few short months.
Please feel free to reference:
Your credit score has NEVER been more important. In this day and age, it affects everything; the interest rate we pay on our credit cards, our car insurance, our homeowners insurance, and in some cases our ability to land a new job, a promotion, and when it comes to our beloved military, that long sought after ranking.
Did you know that something as small as a $12.00 medical collection that you were unaware of could cost you 75 - 100 points and THOUSANDS of Dollars. Do you know where you stand?
We have seen these changes coming for months now. As the result, we have associated ourselves with a law firm who are EXPERTS in credit repair. They are Honest, Integral, and Fair - More importantly, the fees will require a second job!
Get into the NO-FEE ZONE and look into credit restoration. It will save you literally thousands of dollars and bring your piece of mind.
Gwenn Tanvas is a Certified Mortgage Planning Specialists who specializes in Credit Restoration and Government Programs such as FHA, State and Federal VA and USDA Rural Housing Loans. Visit her website for more information, on-line calculators and a secure on-line application. She is able to assist with transaction throughout the state of Wisconsin. Her offices are located in Appleton, Oshkosh and Green Bay and offers the convenience of one-stop shopping.