TAMPA, Fla. — While there is a lack of affordable housing nationwide, a new federal rule may make it easier for some Americans to be first-time homeowners.
Starting Monday, May 1, people with high credit scores may pay more in mortgage fees, but those with a lower credit score may pay a little less.
ABC Action News went through this new rule to figure out why it was coming into play.
Mario Larrea with MI Mutual Mortgage in Tampa said this rule has always existed, but now they're making changes to the Loan Level Price Adjustments.
Larrea added that since 2020, mortgage prices have jumped, making it harder for people with a credit score below 680 to actually get a conventional loan.
“Higher credit scores are less risky, so there is more incentive for us to take that loan. So, we pass that on at a discount, basically, to the prospective buyer or borrower. This [new rule] is freeing up some of those discount points. It is alleviating some of that for the lower credit score people to enable them to go with a conventional loan,” said Larrea.
The goal is to boost affordable housing and help borrowers with lower credit scores get a home.
"It's not as drastic as what people are thinking, you know, the biggest thing you're seeing is that it drops a lot of the cost on those lower scores. So, you know, it might be slightly more expensive in certain scenarios, but it's a very, very minor cost," Larrea said.
Larrea added that someone with a 740 score putting a 5% down payment on a home would see an increase of around $1500; the days of making a bigger down payment might be over since the biggest price increase could be felt by those putting a 15%-20% down payment on a home.
