Mortgage Fee Changes 2023

Presented by Marc Aarons

Hope everyone is doing well.  I am reaching out to share some important news that may affect mortgage loan fees if you plan to buy or refinance anytime in the near future.

Beginning May 1, 2023, new federal rules adjust upfront fees for loans backed by Fannie Mae and Freddie Mac. These fees are based on factors such as your credit score, the size of your down payment, and the type of home you’re purchasing.

Under these new rules, borrowers with better credit scores may end up paying more in upfront fees, while those with lower credit scores may pay less. The Federal Housing Finance Agency has stated that these changes are part of their efforts to provide “equitable and sustainable access to homeownership.”

Here are a few more details about the regulations in effect:

• All new or refinanced home loans signed after May 1, 2023, are subject to the new rules.
• Homebuyers who put down a larger payment of 15% to 20% or have a higher credit score could see an increase in mortgage fees (around $40 per month) for a loan of $400,000, while buyers who put less down or have less-than-perfect credit may see lower upfront fees.
• Keep in mind, however, that buyers who put less than 20% down will have to pay mortgage insurance, which will more than offset the lower upfront costs.

While the impact of these changes will vary depending on your circumstances, having a good credit score and a sizeable down payment is still key in securing the best mortgage rate. Buyers with credit scores of 680 or higher will still receive the largest fee reductions and benefit from better loan terms overall.

As always, it’s important to work closely with a knowledgeable team of professionals so you can understand your buying power, mortgage options, and how these changes may impact your loan payment.

That said, please don’t hesitate to reach out if you have any questions or concerns. I’m here to assist you however I can.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.