LLPA Myth Busting: The Truth about New Fee Changes
In January 2023, Fannie Mae and Freddie Mac (Federal Housing Financing Agencies) announced changes to Loan Level Pricing Adjustments (LLPA). Some of these changes include factoring in a borrower’s debt-to-income ratio (DTI) into their pricing and fee changes based on credit scores.
We’re here to break down some of the myths and facts about what these changes might mean for you!
Myth: Lower credit scores get the same rate as higher credit score borrowers.
Fact: There are reduced fees to many borrowers with lower credit scores but a low credit score borrower isn’t paying less than a high credit borrower. The difference between what they pay is just smaller than it was previously. This is an effort by Fannie and Freddie to help home affordability. There are still a lot of benefits to having a higher credit score when applying for a home loan.
Myth: Borrowers will see a big rate increase on May 1st
Fact: GMFS prepared and adopted these changes back in February 2023.
Myth: The LLPA (loan level price adjustment) is a new change.
Fact: Adjustments for credit scores have always been around but this is a change to the different buckets for adjustments.
Myth: LLPAs will dramatically affect the market.
Fact: Since we implemented changes in February, we have had great success with borrowers and have already absorbed the impact of these changes.
Myth: These changes mean it’s not a great time to buy.
Fact: There are reduced fees for first time homebuyers and low-to-moderate income borrowers to help more people afford a home. NOW is a great time to buy!
Myth: LLPA changes only impact certain lenders.
Fact: The LLPA change impacts all lenders and borrowers. You have an advantage working with an experienced lender like GMFS to reduce chance of last minute surprises or changes.
Question about how these changes could impact you? Are you ready to get started with the home loan process today? Our award-winning team is here to help every step of the way!