Freddie Mac Pinches Lenders, Homebuyers Pay

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Freddie Mac is increasing its fees on riskier home loans for homebuyersFreddie Mac is squeezing lenders tighter this spring, and that means higher fees will be passed on to homebuyers.

The government-sponsored mortgage-finance company stated in a memo last week that it will raise upfront fees to lenders on riskier home loans, including those for homebuyers with lower credit ratings and higher loan-to-value ratios. The changes will take effect March 1.

For borrowers with credit scores below 660, charges could rise to as much as 3.25 percent, while homebuyers with a FICO credit score of 740 or higher will see a 0.25 percent upfront fee. To offset an upfront fee of 0.25 percent, your lender could raise the rate of your 30-year loan by 0.05 of a percentage point, or about $10 a month on a $200,000 loan.
A friendly word of advice: Review your credit score now. Breaking that 740 ceiling could save you thousands in monthly payments.

For more insight on mortgages and credit scores see these AOL Real Estateguides:

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