On May 1, 2023, new Federal mortgage rules went into effect that will affect many homebuyers across the country. The new rules may have a different impact on people with high and low credit scores. The impact of the new rules may vary depending on the lender and the specific terms of the mortgage. While borrowers with higher credit scores may face higher costs, those with lower credit scores may be able to avoid a new fee in the revised rules.
The Federal Housing Finance Agency (FHFA) announced this new fee, called the Adverse Market Refinance Fee, which will be charged to lenders who sell mortgages to Fannie Mae and Freddie Mac. This fee is designed to help cover the cost of COVID-19-related losses incurred by Fannie Mae and Freddie Mac. The fee applies only to refinances, not new home purchases. So, if you're a homebuyer in the Phoenix area looking to purchase a new home, this rule may not affect you. However, if you're considering refinancing your existing mortgage, this new fee may increase or lower your overall costs.
Under the new rule, borrowers with higher credit scores may face higher costs when refinancing their mortgages. This is because lenders may pass on the Adverse Market Refinance Fee to these borrowers instead of absorbing the cost themselves. On the other hand, borrowers with lower credit scores may avoid the fee altogether, because lenders may be more likely to absorb the cost for these borrowers to remain competitive.
It's essential to work with a trusted mortgage professional who can help you navigate this change and find the best possible mortgage for your unique financial situation. A professional REALTOR® should be able to refer you.
