Credit Score Affects Interest Rates Even More

On March 6, 2008, Fannie Mae came out with Announcement 08-04 which spells out the increased Loan-Level Price Adjusments (LLPAs). These LLPAs replace those discussed in my blog article “How Much Will My Credit Score Cost Me.”

An LLPA is an additional fee on top of any points and closing costs paid for a mortgage based upon the Loan to Value Ratio (LTV) and the borrowers’ credit score. So, the higher the LTV and lower the credit score the more you will have to pay for a mortgage. This can take the form of additional points and/or higher rates.

The new LLPAs are as follows:









1 These LLPAs do not apply to loans with amortization terms of 15 years or less, Expanded Approval®, Expanded Approval with Timely Payment Rewards®, MyCommunityMortgage®, and most Government loans. See LLPA Matrix for details.

CASH-OUT REFINANCES - FICO Score/LTV








Two- to Four-Unit Property LLPAs2
The two-unit LLPA below replaces the existing two-unit LLPA. The three- and four-unit LLPAs are new LLPAs.

• Two-Units: 0.50% LLPA applicable to all LTVs
• Three- to- Four Units: 1.00% LLPA applicable to all LTVs
2 These LLPAs do not apply to MyCommunityMortgage loans.

All LLPAs are cumulative unless otherwise noted.

These new LLPAs are effective with all mortgage delivered to Fannie Mae beginning June 1, 2008. Most lenders have already incorporated these new LLPAs into their current rate sheets. Your credit score is more important than ever in getting a good rate on a conventional loan. For information on credit scores please visit my blog article "Understanding Credit Scoring & Credit Repair.”

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