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What you need to know about the changes to mortgage fees

by Chris O’Shea

There are changes that will impact your upfront mortgage costs. The reason? The fee structure for loans backed by Fannie Mae and Freddie Mac has been changed. Here’s what you need to know.

Fee Changes Up and Down Based on Credit

The changes to the upfront fees are centered on credit scores and down payment size. Generally speaking, if you have a high credit score — while you’ll still pay less than someone with a low credit score — the changes mean you’ll be paying slightly more. If you have a lower credit score, you will pay slightly less in upfront fees than before. These changes are being made to help make home ownership more affordable for those with lower credit scores.

Fee Change Breakdown

The numbers for the changes in mortgage fees are as follows:

• 0.75% increase in upfront costs for people with high credit scores (650 or better).

• 2% decrease for people with low credit scores (630 or lower).

Some Real-World Numbers

Let’s take a look at a quick example of how these changes will impact borrowers:

If you have a 750 credit score and put a 25% down payment on a $400,000 house, you’ll now pay $1,125 in fees. That’s up from $750 in fees before the changes.

If you have a 650 credit score with the same home price and down payment, you’ll now pay $4,500 in fees. That’s down from $8,250 before the changes.

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