Borrowing Costs Increase

Borrowing cost increase in 2008
I have spent a long Thanksgiving weekend reading emails as to the increased cost to consumers for mortgage loans. It seems as the public will have increased costs to borrow as the transaction relates to down payment and credit scores.

Three of the "agencies" involved in the securitizing and insuring of single family home loans are going to institute risked based pricing into the lending models. Fannie Mae, Freddie Mac and FHA announced this month that to deliver loans with lower credit scores and smaller down payments will increase to required LLPA's (LOAN LEVEL PRICING ADJUSTMENTS) and /or Risked based premiums.Fannie Mae and Freddie Mac increases will go into effect 3/01/08 and FHA risked based premiums are effective 1/1/08.

It seems that the new benchmark for credit scoring will now be a representative score( middle score of the lowest of 2 borrowers) of 680 and with a down payment of 10%. Any transaction with criteria less than this will have adjustments. Try to educate some of your fence sitters as to the need to get that transaction underway prior to these increases.