What mortgage brokers don’t tell you: Hidden penalties abound

There’s a host of information a mortgage broker or banker won’t tell you up front that may increase the cost of your financing.

You could pay much more on a mortgage than your initial quote rate based on a rating system used by government mortgage insurers Fannie Mae and Freddie Mac. Brokers and bankers rarely tell you this coming in the door. They want to lock you in to a loan as soon as possible. With rates rising, this is really important to know.

In the wake of the biggest real estate meltdown in American history, the devil’s in the details when you apply for a loan. This hidden rating system will penalize you with a higher rate if your credit score is low or you apply for certain types of loans. It’s being employed by Fannie Mae and Freddie Mac, the government’s captive mortgage entities, which account for about 80 percent of new loans now.

As of January 1, mortgage brokers and bankers have to tell you that you may not get the best rate if your credit report is flawed, although they may not give you essential details up front on what else could bump up your finance rate.

You need to ask about how you will fare in the Fannie/Freddie “risk-based pricing” regime, which is basically a computer-run scoring matrix run by your banker. Here are some factors that could raise your cost of credit:

•Credit scores (based on the FICO system) below 740.
•High loan-to-value ratios (the percentage of the property’s value that’s mortgaged). The more equity you have or the more money you put down, the lower your rate.
•Adjustable-rate, Interest-only or 40-year loans.
•Cash-out refinancings.
•Investment properties.
•Condominiums and cooperatives.
•Manufactured homes.
•Multiple-unit properties.

The risk-based pricing program evaluates the type of loan, your credit score and loan-to-value ratio and determine what “add-ons” will boost your quoted rate, if any.

Read the full article here.

If you are thinking of href="http://www.ilovegarrettcounty.com/">buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

Deep Creek Do It All specializes in cleaning services in Garrett County & @ Deep Creek Lake. Give them a call (301-501-0217) or visit the website - competitive rates and quality results from a locally owned & operated company!