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Rising mortgage fees could complicate relocations for some

January 28, 2011 - Some consumers might have to put their moving plans on hold once new mortgage fees take effect.

Fannie Mae says its new fee structure, known as risk-based pricing, will take hold April 1. The company says it is attempting to reduce the level of risk it assumes when underwriting mortgages to homebuyers with low credit scores, however the price structure will likely impose fees on most homebuyers. Fannie Mae will evaluate buyers' credit scores and loan-to-value ratios, and only those with scores of 740 and ratios above 75 percent won't be affected. Only a small portion of buyers fall within that range.

Experts say the issue could force many relocating families to reconsider their home purchase if the fees become too prohibitive.

"What could happen is that the people who are, let's say, at a 675 score might end up waiting a couple of months because the difference between a 675 and 680 is big," Les Berman, a senior mortgage advisor with First Cal, told MarketWatch.

On the plus side, it won't take long for most borrowers to know if their credit score is also pushing their mortgage rates higher and making their home loan more costly. Banks are now required by law to inform buyers if their credit score is negatively affecting their loan terms.
 

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