Are Fannie and Freddie Getting Ugly?
Mortgage giants Fannie Mae and Freddie Mac have spent a lot of time in the news lately. And while few know exactly what these two government-sponsored enterprises (GSEs) do we all know they have a lot of influence over the American mortgage market. Because they buy and sell such a large percentage of mortgages we kind of have to play by their rules.
Right now, the rules are getting tough. Unless you walk on water when it comes to credit scores and you have a substantial down payment, you will find yourself being hit with surcharges when you get your mortgage. Fannie Mae’s Loan Level Pricing Matrix indicates that a borrower with a credit score of 679 can expect to pay a surcharge of 1.25% for a mortgage — even if he or she is putting 25% down! But wait, there’s more — if the property is in a soft or “adverse” market there is a .25% delivery charge, and larger loans (called jumbo conforming), loans for multi-family properties, and financing for condominiums can add a slew of extra fees to the deal.
Adversity is opportunity. Consider that it’s a buyer’s market in most parts of the country, and with financing getting harder to find and more expensive things won’t get better for sellers any time soon. Yet it seems like everyone is afraid, waiting for housing to pick up and the moment to be right. Markets, however, are infamously hard to time, and by hanging with the herd you may be forgoing a chance to make a great investment and lock in a low rate. So check with lenders and see if you qualify for a mortgage and what fees might apply to you. Then find a motivated seller (about as tough as finding a needle in a needle stack right now) and see how many of those fees the seller would be willing to pay.
