The fee, which will apply to those buying or refinancing houses after May 1, will affect homebuyers with credit scores of 680 or higher, will amount to roughly $40 per month on a home loan of $400,000, or nearly $500 per year. Homebuyers who make down payments of 15% – 20% will be hit with the largest fees.
According to those in the industry, the changes will frustrate homebuyers with high credit scores, as well as those looking to refinance, as they’re being punished for having strong financial positions.
“The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well,” said Ian Wright, a senior loan officer at Bay Equity Home Loans in the San Francisco Bay Area. “It overcomplicates things for consumers during a process that can already feel overwhelming with the amount of paperwork, jargon, etc. Confusing the borrower is never a good thing.”The housing market has been hit hard by a series of Federal Reserve interest rate hikes that have driven mortgage rates above 6%, roughly double the level from early 2022. The Fed has raised rates rapidly to bring down inflation, which hit a four-decade high of 9.1% last summer.