There have been discussions about completely overhauling the Fannie Mae and Freddie Mac programs, and researchers are suggesting that this overhaul will likely have a direct impact on the mortgage rates. In fact, a recent study suggests that interest rates will go up for people who have weaker credit scores, which might have a negative effect on whether or not those people are able to purchase a home.
How Much Will Interest Rates Increase?
Many people in the real estate industry are wondering about these possible interest rate increases, especially Colorado wholesale lenders who will be directly impacted by these increases. Only time will tell how much the rates will go up, but it has been suggested that they could go up by as much as 1.5 percentage points.
To most people who aren’t familiar with mortgage finance or interest costs, 1.5 percentage points probably doesn’t sound like a lot. But, if you do the math, you will see that it can make a big difference over the period of a few years, especially if it’s a large loan. Interest costs can be very deceiving to the average person who doesn’t fully understand how wholesale mortgages work, and these interest costs can result in thousands and thousands of dollars that are paid in interest over the course of the loan.
If you are considering the purchase of a home, then it’s important that you talk with a qualified advisor who can help you to fully understand the responsibilities and obligations that are associated with home ownership. Additionally, they can explain the way your interest rate will impact your home mortgage in the long run, so that you can make your decision to support your individual needs.
Who Will be Impacted By the Changes?
The question that most wholesale lenders are asking, as well as anyone else in the industry, is whether a large portion of their potential clientele will be affected. At this point, the bill that has been proposed is to wind down the Fannie Mae and Freddie Mac programs, and replace the system with an entirely new setup for government mortgage insurance. They are looking for a complete overhaul to start over.
According to the study, the rates will likely rise, but we will have to wait and see how much of an impact these changes will have on interest rates. The estimate is that the people who will feel it the most are those who have credit scores ranging between 650 and 750 FICO, and have a down payment between 5% to 15%.
Other bills have also been proposed, but nothing has been determined at this point. Some people have argued that the proposed bills will not have much of an impact, mainly because the people who will be affected aren’t really looking for mortgages at the current time. Tighter standards for underwriting have prevented their ability to qualify for a mortgage.
Stay tuned to DaveKevelighan.com regarding mortgage industry rates and updates, or call Dave directly at (303) 520-0004.
