We have received a lot of questions on this of late and I’ve found this article to be the most fact based that we could share. This article has a lot of mortgage jargon contained within and if you have any questions, we are always happy to answer them. In the end there are some loan level price adjustments that help first time home buyers, make some loan scenarios a little more expensive but it is important to note the loan level price adjustments change often and this one is making more news than others. Again, we are here to answer any questions and do not try to lower your credit score to get a home loan!
Article: Is There Really a New, Unfair Mortgage Tax on Those With High Credit?
So a low credit borrower isn’t paying less than a high credit borrower? The gap between what they pay is just smaller than it was?
YES! Again, all value judgements and political commentary aside, the change amounts to a tweak of an existing fee structure in favor of those with lower credit scores and at the expense of those with higher credit scores, but there’s no scenario where someone with lower credit will have a lower fee. In other words, don’t go skipping those credit card payments in the hopes of getting a lower rate.
The fact of matter is that LLPAs are indeed changing in a way that improves costs for those with lower credit scores and increases costs for those with higher credit scores (in many cases, anyway). But people are confusing the CHANGE for the ACTUAL cost.