Interest Rate and Credit Score

[kymom99]

Here’s something to consider. Historically you needed 20% down to avoid PMI and to get the better rates. Who decided on 20 %? It’s not in the constitution. If it needs to be adjusted, so be it. Things change.

My step daughter bought a house. I never in a million years thought she could, but she did. She jumped through every hoop they put in front of her. She had to pay off her car loan. She applied for a grant. The house she bought is not in a good neighborhood so she had to put in an alarm system after a drug addict tried to break in while they were at home. If it costs someone a couple more dollars to help someone have a house to come to at the end of the day, I don’t see how it’s such a terrible thing. Sometimes it helps when I look at the big picture.

 

[china mom]

...If it costs someone a couple more dollars to help someone have a house to come to at the end of the day, I don’t see how it’s such a terrible thing. Sometimes it helps when I look at the big picture.

But if it costs someone $14,000 to help someone have a house... That is what a $40 per month increase represents over the life of a 30 year loan. I am not that generous.

 

[Mle8308]

So lower income home buyers will have “slightly” more room in their monthly budget due to a “slightly” lower interest rate. Sellers will know this, and homes on the lower end of the price spectrum will magically become “slightly” more expensive. For every buyer that is given free money there is a seller that knows free money is the easiest kind of money to convince buyers to part with. This will solve nothing.

It doesn't have to do with income, it's credit score. There are wealthy people with awful credit scores and low income people with high credit scores. So not necessarily helping people with a low income, these people could actually end up helping to "fund" a wealthy person's mortgage!

 

[RamblingMad]

But if it costs someone $14,000 to help someone have a house... That is what a $40 per month increase represents over the life of a 30 year loan. I am not that generous.

I can’t reconcile that math. A .125% increase on a $400k balance is a one time fee of $500.

No idea where this $40 month comes from.

And most people aren’t in their homes with the same mortgage for 30 years. It’s usually around 5-10 years. The average consumer wastes more in moving costs and real estate fees.

 

[china mom]

I can’t reconcile that math. A .125% increase on a $400k balance is a one time fee of $500.

No idea where this $40 month comes from.

And most people aren’t in their homes with the same mortgage for 30 years. It’s usually around 5-10 years. The average consumer wastes more in moving costs and real estate fees.

I was going by several articles that said $40/month. I will have to research some more on that.

I do plan on holding several properties for 30 years. I probably won't stay in my primary but my long term financial goal is to pay off some investment properties. Luckily, I won't be affected by these changes as I have no plans to refinance of purchase any time soon.

 

[Mle8308]

I can’t reconcile that math. A .125% increase on a $400k balance is a one time fee of $500.

No idea where this $40 month comes from.

And most people aren’t in their homes with the same mortgage for 30 years. It’s usually around 5-10 years. The average consumer wastes more in moving costs and real estate fees.

For a home buyer with a 740 or higher credit score, and a 15% to 20% down payment, there will be a 1% surcharge (hence the $40 a month on a $400K Loan), up from .250%. Google it if you want more.

 

[RamblingMad]

I was going by several articles that said $40/month. I will have to research some more on that.

I do plan on holding several properties for 30 years. I probably won't stay in my primary but my long term financial goal is to pay off some investment properties. Luckily, I won't be affected by these changes as I have no plans to refinance of purchase any time soon.

I posted the schedules being discussed. They’re credit score and LTV matrices. The impact is the difference between the two. You’ll find different matrices depending on loan purpose such as refi versus purchase.

 

[RamblingMad]

For a home buyer with a 740 or higher credit score, and a 15% to 20% down payment, there will be a 1% surcharge (hence the $40 a month on a $400K Loan), up from .250%. Google it if you want more.

I posted the actual FM schedules.

 

[china mom]

I posted the schedules being discussed. They’re credit score and LTV matrices. The impact is the difference between the two. You’ll find different matrices depending on loan purpose such as refi versus purchase.

Yes, but I don't plan on either. I m lucky to have low interest rates and when I do decide to move, I will be downsizing so I should have enough cash down payment that I won't be affected by the fee difference (if I am reading the matrix correctly)

 

[Ms.Minnie]

Taxes are lower on dividends than ordinary income. That’s the tax code.

I'm not a tax expert, I use an accountant to do my taxes each year, it's much easier that way.

I'm not sure how a flat tax would or would not affect dividend income so I can't really debate the issue with you. The fact still remains that Warren Buffett did comment on the fact that he pays less in taxes than his secretary.

It doesn't have to do with income, it's credit score. There are wealthy people with awful credit scores and low income people with high credit scores. So not necessarily helping people with a low income, these people could actually end up helping to "fund" a wealthy person's mortgage!

Very good point.

 

[RamblingMad]

Maybe Tucker Carlson will explain it later...


Oh wait...

I thought he’s moving to OAN.

 

[TippyThomas]

I thought he’s moving to OAN.

No idea. I just read the news of his recent departure.

 

[GAN]

I thought he’s moving to OAN.

Hey.. sounds like he's moving up

My bet was on him joining David Pecker.....

 

[mom2rtk]

I have children as well ready to buy ..but they're either going to wait or pay. It wasn't fair for me either when I had a 6%+ mortgage and PMI on my first home. But here I am....

What options are there but to wait or pay?

And what option was there to a 6% mortgage?

None of that is the point. Nobody was expecting you to pay more to subsidize others with a lower credit rating. Everybody was being treated the same way.

 

[GAN]

What options are there but to wait or pay?

And what option was there to a 6% mortgage?

None of that is the point. Nobody was expecting you to pay more to subsidize others with a lower credit rating. Everybody was being treated the same way.

Anyone who is paying a PMI is subsidizing others, just like any insurance. Even though I knew I would pay my mortgage every month, I didn’t have the cash for 20% down so I paid the PMI which covers the cases of people who wouldn’t pay. I’m not sure why people are missing the actual point of this ….the alternative is to risk crashing the housing market and economy. Are you suggesting you’d be good with that? No -it may not be “fair” (we actually don’t really know who would get hurt by it) but FM feels it’s a necessary move. Again …for a large percentage we‘re talking about people that may not have qualified prior for whatever reason and up and coming young people.

 

[RamblingMad]

Anyone who is paying a PMI is subsidizing others, just like any insurance. Even though I knew I would pay my mortgage every month, I didn’t have the cash for 20% down so I paid the PMI which covers the cases of people who wouldn’t pay. I’m not sure why people are missing the actual point of this ….the alternative is to risk crashing the housing market and economy. Are you suggesting you’d be good with that? No -it may not be “fair” (we actually don’t really know who would get hurt by it) but FM feels it’s a necessary move. Again …for a large percentage we‘re talking about people that may not have qualified prior for whatever reason and up and coming young people.

PMI is essentially GAP insurance for your lender that you pay. The expectation is that if you default on your mortgage, your lender would only collect 80% of its value when sold. PMI covers the other 20% for your lender to make them whole.

What this thread is about is a securitization fee imposed by FM on lenders that want to sell them pools of loans as mortgage backed securities.

These two aren’t remotely the same.

 

[DCLMP]

Maybe Tucker Carlson will explain it later...


Oh wait...

Maybe Don will.

 

[DCLMP]

Maybe the Onion will take him.

I don’t think he’ll have a problem finding a better gig. He could start a pod cast and have 20 million in a blink of an eye.

 

[GAN]

PMI is essentially GAP insurance for your lender that you pay. The expectation is that if you default on your mortgage, your lender would only collect 80% of its value when sold. PMI covers the other 20% for your lender to make them whole.

What this thread is about is a securitization fee imposed by FM on lenders that want to sell them pools of loans as mortgage backed securities.

These two aren’t remotely the same.

I get it …people are claiming it isn’t fair. What’s fair?

 

[RamblingMad]

I get it …people are claiming it isn’t fair. What’s fair?

It’s angry news designed to create an emotional response.