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from sfgate
Housing prices may be coming down, but slowly but surely mortgages are becoming harder to acquire, especially if you don't have a lot of cash.
It's not what home buyers, sellers and refinancers want to hear, but what they need to know. Fannie Mae and Freddie Mac are ratcheting up their mandatory fees and toughening credit-score and down-payment rules as of April 1.
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Under Fannie's and Freddie's new guidelines, even applicants who assumed their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or higher. For example, a buyer with a 699 FICO score who can make a down payment of 25 percent will now get hit with a 1.5 percent "delivery" fee at closing under the new guidelines.
A buyer with a Fair Isaac Corp. FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO will get dinged with a quarter-point add-on.
Applicants who seek to buy a condominium and cannot come up with a 25 percent down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score - simply because they are not purchasing a traditional detached, stand-alone home.
Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a flat 1 percent add-on from Fannie, even if they've got FICOs above 800 and make 50 percent down payments. Refinancers who take cash out at settlement also will be forced to pay extra - as much as three points if they've got low credit scores and modest equity stakes.
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Charles McMillan, president of the National Association of Realtors, complained in a letter to the Federal Housing Finance Agency, the regulator of Fannie and Freddie, that not only are individual fee increases unjustified, but that in combination they could seriously deter home purchases.
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As recently as two years ago, FICO scores in the upper 600s were enough to qualify any applicant for prime financing. Now scores of 720 to 740 are the bare minimum if you're going to escape add-on fees - and still not good enough if you choose to buy a condo or a duplex.
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But there's an alternative for just about anyone who wants to avoid the fees: Federal Housing Administration mortgages, where down payments go as low as 3.5 percent and credit scores are not an issue for most applicants.
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Under Fannie's and Freddie's new guidelines, even applicants who assumed their FICO scores would get them favorable rates will be charged more unless they can come up with down payments of 30 percent or higher. For example, a buyer with a 699 FICO score who can make a down payment of 25 percent will now get hit with a 1.5 percent "delivery" fee at closing under the new guidelines.
A buyer with a Fair Isaac Corp. FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO will get dinged with a quarter-point add-on.
Applicants who seek to buy a condominium and cannot come up with a 25 percent down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score - simply because they are not purchasing a traditional detached, stand-alone home.
Buyers of duplexes, where one unit is owner-occupied and the other is rented, will be charged a flat 1 percent add-on from Fannie, even if they've got FICOs above 800 and make 50 percent down payments. Refinancers who take cash out at settlement also will be forced to pay extra - as much as three points if they've got low credit scores and modest equity stakes.
.
.
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Charles McMillan, president of the National Association of Realtors, complained in a letter to the Federal Housing Finance Agency, the regulator of Fannie and Freddie, that not only are individual fee increases unjustified, but that in combination they could seriously deter home purchases.
.
.
.
As recently as two years ago, FICO scores in the upper 600s were enough to qualify any applicant for prime financing. Now scores of 720 to 740 are the bare minimum if you're going to escape add-on fees - and still not good enough if you choose to buy a condo or a duplex.
.
.
.
But there's an alternative for just about anyone who wants to avoid the fees: Federal Housing Administration mortgages, where down payments go as low as 3.5 percent and credit scores are not an issue for most applicants.
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