Though home prices in the US are down, mortgage costs are heading up, according to a memo released by Fannie Mae in late December.
The government-controlled GSE has implemented a new schedule for higher add-on fees since the new year, similar to what Freddie Mac imposed since Thanksgiving 2010. This would lead to home loans costing thousands more, even if borrowers boast substantial down payments and high credit scores.
The fees start at the top and apply to people who have previously qualified for low-cost and no-cost loans. For instance, borrowers with a credit score of 800 and a down payment of 25 percent will be paying another 25 percent on the sum of the loan amount. Higher risk borrowers and those with lower down payments will see multiple percentage points added to their mortgage costs.
Both GSEs will also be adding costs to mortgages based on the type of property being purchased. For instance, a loan for a condo will be more expensive compared to a loan of the same amount for a standalone home.
According to reports, rental investments will get “significantly higher costs”. Many government lenders have already required $150 billion in government “financial infusions” since 2008, and they continue to guarantee or finance more than two-thirds of new mortgages.