Changing Mortgage Fees Could Increase Costs for Buyers With Higher Credit Scores

The fees folks pay to get a mortgage is an issue heating up in the home-buying market. They are changing and people with higher credit scores might end up forking over more than before.

“We're getting a lot of phone calls, not just from consumers, but also from real estate agents and other industry professionals,” said Alyssa Caliendo, Bay Equity Home Loans branch manager.

Caliendo – from Bay Equity Home Loans in West Hartford – is hearing a lot of questions about changes to fees on new mortgages set to officially take effect next Monday, May 1.

These are for conventional mortgages backed by Fannie Mae or Freddie Mac.

If you’re in the market for a home, we’re told it’s probably too late to avoid a potential fee increase. Current rates being offered already have the upcoming changes baked in.

“Anyone who got into a house the last few months is safe. But anyone who hasn't yet is going to be impacted by the rate and rule changes,” said Caliendo.

What’s getting a lot of attention is that the updated fee structure means costs will increase for folks with higher credit scores and fees will decrease for those with lower credit scores.

The Federal Housing Finance Agency calls this a step toward “equitable and sustainable access to homeownership.”

“I don't think it's going to disrupt the mortgage market tremendously for the high-rated borrowers. And if it helps a low-rated borrower, you know, access housing, it probably is not a bad thing,” said David Sacco, University of New Haven business practitioner in residence.

For example, these would be the changes for someone buying a $400,000 home with 25% down.

According to NBC News, a person with a 750 credit score would see their fees increase from $750 to $1,125. Another person with a 650 credit score would see a big drop from $8,250 to $4,500.

While previous government initiatives have helped lead to housing market troubles, Sacco says he doesn’t think that will be the case with this adjustment.

“And a lot of it makes sense, you just have to be careful that we don't do sort of too much of a good thing,” said Sacco.

Experts point out that a lot of factors play into what you pay for a mortgage. And the boost in interest rates far outpaces the changes to the fees.