HOUSTON, April 25, 2023 - There is news circulating on the Internet about a supposed new mortgage tax on borrowers with high credit scores.
However, this claim is false, and intentionally lowering one's credit score will not result in a better mortgage rate. The news actually pertains to changes in Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac, which guarantee most new mortgages. LLPAs are fees based on loan features such as credit score and loan-to-value ratio, and changes to them were announced in January of this year. Confusion has arisen because the changes go into effect on loans delivered on or after May 1st, 2023, and lenders have already implemented them for many loans. The changes in LLPAs benefit those with lower credit scores and increase costs for those with higher credit scores, but the actual fee paid by low credit borrowers will not be lower than that paid by high credit borrowers.
"We want consumers to understand that it is never a good idea to take any action that negatively impacts you're credit score," said Jason Smargiasso, Chief Compliance Officer at AmCap Home Loans.
The change is a minor adjustment to the fee structure that benefits borrowers with lower credit scores and increases costs for those with higher credit scores. However, this does not mean that borrowers with lower credit scores will have lower fees than those with higher credit scores. It means the gap between the two will be smaller. That said, it is not advisable to skip credit card payments in an attempt to secure a lower mortgage rate.
About AmCap
Whether you dream of buying your first home, refinancing your current mortgage or consolidating debt, our highly experienced team of mortgage professionals will work with you to find the best loan program to fit your budget and your needs. Since 2008, AmCap home loans and refinance experts have provided a streamlined mortgage loan process that alleviates the stress of buying a home. AmCap is licensed in more than 40 states. AmCap has been a Houston Chronicle top workplace for 12 years in a row. Interest applicants should seek further information at amcaprecruiting.com.
SOURCE AmCap Home Loans
