Interest Rate and Credit Score

[Dan Murphy]

Hasn't started yet. Coming soon.

Oh, I see. thanks. When?

 

[Party.Of.4-NY>>>FL]

Hasn't started yet. Coming soon.

May 1st IIRC.

 

[Dan Murphy]

May 1st IIRC.

Thanks.

 

[Dan Murphy]

Well, I am not in the mortgage market, but if I was, I'd probably be pissed.

 

[Party.Of.4-NY>>>FL]

So lower income home buyers will have “slightly” more room in their monthly budget due to a “slightly” lower interest rate. Sellers will know this, and homes on the lower end of the price spectrum will magically become “slightly” more expensive. For every buyer that is given free money there is a seller that knows free money is the easiest kind of money to convince buyers to part with. This will solve nothing.

 

[RamblingMad]

So you're saying anyone with less than 25% equity will indeed be paying more with good credit. On top of already higher interest rates.

Check out the matrix for the new loan you plan to get. It doesn’t impact existing loans. And it depends on how the lender ultimately plans to pass on the cost. The impact is the difference between the two matrix.

 

[RamblingMad]

Well, I am not in the mortgage market, but if I was, I'd probably be pissed.

Depends on credit score and LTV.

 

[mom2rtk]

Check out the matrix for the new loan you plan to get. It doesn’t impact existing loans. And it depends on how the lender ultimately plans to pass on the cost. The impact is the difference between the two matrix.

I never said it impacted existing loans. People can care about things that are unfair even if they aren't personally affected.

 

[LuvOrlando]

Preparing to consider re-entering the market for a home for retirement & the first thought was, ehh I just won't buy for a while.

Second thought was, hmmm, is noone thinking that getting better paying jobs into minority communities might be the better right answer? People don't want or need help, they need jobs so they can do it themselves : / The last time mortgage requirements were lowered for poor people, same squad BTW, people working at Mickie D's got McMansions with interest only loans, flipping happened, then when interest rates went up all the poor people lost what little wealth they had and wrecked their credit ratings as they defaulted then the entire mortgage industry crashed and the entire countries banking industry nearly crashed too sooooo... what gives, no lessons? Really? Enticing well paying jobs into inner cities really not a better answer? Really really? Come on, really? Are we all being punked where is the Candid Camera. Someone is kidding, right?

The right answer is better jobs.

 

[tvguy]

Well, I've never heard of such a thing but I have never concerned myself with my credit score. Any time I needed credit, I always got the lowest rate. I only know my credit score now because my bank puts it on my log in page for my accounts. I don't expect to ever need new credit every again. And while I never pay interest on my credit cards, I have shifted to paying for things like groceries that I never thought I would be charging, so the credit card company is making 3% on everything on my spending for processing my purchase. But if I was forced too, I would shop around and expect credit providers to reward my good credit.

 

[Sanchez]

Cool! Another dog whistle thread!

Except it isn’t. Do you ever tire of being wrong?

 

[jrmasm]

Except it isn’t. Do you ever tire of being wrong?

Thanks for the laugh!

 

[Southernmiss]

The actual story from the mortgage industry.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023

As expected, the talking points spinning in the media are not exactly true.

From the website quoted above-
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.

As you can now plainly see, if you have a score of 640, you'll be paying significantly more than if you had a 740. Using an 80% loan-to-value ratio as an example, your LLPA at 640 is 2.25% versus 0.875% for a 740 score. That's a difference of 1.375%, or just over $4000 on a $300k mortgage. This is almost HALF the previous difference, and that's certainly a big change.


Yes, it's a big change, so why is the government doing this to people with higher credit?!



Fannie and Freddie technically have a "mission" to promote affordable home ownership. Here is the statement on the topic by their regulator, the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework.

Note in the first two tables that there is more of an improvement for the lower FICO rows on PURCHASES (i.e. home ownership vs refis).


Any other misconstrued news I need to know about?

Yes, actually. While not as viral as the LLPA stuff, there has been a fair amount of press on a new 40yr FHA mortgage. THERE IS NO NEW 40yr FHA LOAN! Lenders who collect payments on FHA loans have a new option to offer loan modifications with terms of 40 years to borrowers who are unable to pay their existing FHA loans.

 

[Living42Day]

I must not watch whatever channel this was on.

 

[Living42Day]

The actual story from the mortgage industry.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023

As expected, the talking points spinning in the media are not exactly true.

I wish people would do more research, such as reading articles like this, instead of blindly following. Certain news channels thrive off of creating outrage. Don't take the bait, people!

 

[Southernmiss]

I wish people would do more research, such as reading articles like this, instead of blindly following. Certain news channels thrive off of creating outrage. Don't take the bait, people!

Exactly

 

[TippyThomas]

changed my mind. don't need the trouble it will cause.

 

[mrodgers]

Private banks are free to charge any rate they want. The government can't control what rates they charge. I fully expect that borrowers to exploit any loopholes to get the best rates possible. If banks charged someone with an 850 credit score a higher rate than someone with a 650 credit score then borrowers would simply start paying their credit bills late for a few months in order to reduce their credit score to 650.

Bingo. It wouldn't be difficult for me to max out my credit cards and pay minimums for a short period of time. I spend $1500-2000/month on credit cards paying every bill that allows and all other spending. I pay it every payday with the previous paycheck that sat in the bank account for 2 weeks. I don't wait and just pay the balance of the statement. I'm paying the CC online anyways and paying bills, I log on and pay the CC as well. It's just part of my budgeting process, though it drives me a little nuts on Friday night when anything I spent Thursday hasn't cleared yet by Friday.

Drop my credit score, get my mortgage, pay the credit cards off with the money I hadn't been sending like I usually do.

I am in the market in the future to buy a house. Ridiculous that I'm not loaded. I don't make a lot of money. But I have a good credit score so this would probably prevent me from getting a mortgage because it's not exactly affordable without all this to buy a house as it is.

I have a great credit score so I can get a good rate on a loan, and now I would have to save even more of a down payment to get a mortgage payment affordable. It's not like we didn't just double to triple housing prices to begin with making having a home unaffordable and only affordable to well off folk.

 

[mrodgers]

I looked at the numbers today from Fannie Mae. The impact is roughly an eighth of a point for good credit. But this goes away if you have at least 25% equity. More fearmongering.

Matrix before:

https://singlefamily.fanniemae.com/media/33201/display

Matrix after:

https://singlefamily.fanniemae.com/media/9391/display

It's too political to respond to this. All I'll say is the numbers don't matter. It's the principle of things people in charge are doing that matters the most.

 

[Traveling on cc points]

How will you be penalized? You just need to figure out to game the system and adjust your score accordingly. It is very easy to lower your score if need be.

I hope you are kidding. You can’t possibly be suggesting that with good scores should have to pay a Creditcard or mortgage payment late to get the best rate? I Hope the people play the “game” don’t need any other kind of loan or a new cretint card for the next 5 to 7 years.