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Lending Tree
Lenders to begin tacking on new fees for mortgages
A quarter-point fee will affect just about everyone who gets a conforming mortgage — a home loan for $417,000 or less that's not considered subprime and is not insured by the Federal Housing Administration. Additional fees will affect borrowers who have credit scores below 680 and who will owe more than 70 percent of a home's value. Still others apply to anyone buying an investment property or getting a 40-year mortgage. The riskier the loan, the pricier the fees. "We've been talking about risk-based pricing for years. It's here," says Bob Walters, chief economist for Quicken Loans. The charges will be assessed on loans that are securitized after the end of February. Because securitization takes time, some lenders started levying the fees in November. Soon, all lenders will pass along the new fees, either as closing costs or by charging higher interest rates. For consumers, the new charges come at an awkward time. Credit scores often take a dive during and after the holiday shopping season because people run up their credit card balances. Maxing out a store charge card could cause someone's credit score to dip below 680, subjecting the oblivious shopper to mortgage fees in the new year.