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Your next mortgage may be risk adjusted!

Up until now your mortgage rate was based on the type of mortgage you chose and your credit profile.  But lenders have already started to assess up-front fees based on an individual’s credit score, and in the future this change may begin to resemble pricing similar to homeowners insurance factoring in many more variables.

If your credit score is under 720, you may be paying anywhere from a half point (0.5%) to as much as 2.75% in extra fees as your score gets lower according to Freddie Mac.  While some lenders assess a higher interest rate on your mortgage instead of charging you upfront fees.

The good news for those with exceptional credit may be lower than average rates and better loan terms.  The bad news is that those with below average credit score will be paying more for their loans than previously before.

In addition, shopping for a loan may become more time consuming because these risk adjusting fees may vary widely among lenders and mortgage brokers.

In the future, spending more time shopping for your mortgage loan will be time well spent.