If you are going to be getting a loan funded Fannie Mae or Freddie Mac there are new few changes coming on May 1. Upfront loan fees will be changed due to alterations in Loan Level Price Adjustments (LLPAs), which are fees that differ for each borrower based on factors such as credit scores, down payments, property types, and more. These adjustments are connected to credit scores and the size of down payments.

In certain instances, individuals with higher credit scores might end up paying more, while those with lower credit scores could pay less.

What do the fee modifications entail? The entire fee matrix, based on credit score and down payment, has been revised. Although having an excellent credit score still results in lower fees compared to a poor credit score, the penalties for lower scores will be less severe after May 1st. For instance, with a credit score of 659 and borrowing 75% of the property’s value, you’ll face a fee equivalent to 1.5% of the loan balance. Prior to these changes, the fee would have been 2.75%. On a hypothetical $300,000 loan, this equates to a $3,750 reduction in closing costs. Conversely, if your credit score is 740 or above, you would have been charged a 0.25% fee on a loan for 75% of your home value before May 1st. After this date, you might pay up to 0.375%. If want to see how this affects your borrowing costs fill our our online qualifier or schedule a meeting on our website.

A letter of explanation is typically requested when specific information in your application raises a red flag for the lender. For example, it may be needed to explain a job change, past credit issues, new credit card applications, large bank transactions, or unsteady income sources. Proactively submitting a letter of explanation can be beneficial if you are aware of potential issues in your application.

Of course in the event you need to provide a letter, we can help with it so you’re not in it alone