You Won’t Get a Better Interest Rate With a Lower Credit Score

The Media is Wrong

In the last few days, we’ve heard the news advertising how new changes rewards people with low credit with better interest rates. It’s not what it seems!

We aim to deliver information that is simple and clear enough that the average home buyer could understand without having to scratch their head too much! Unfortunately, the world of mortgages aren’t always black and white, and the media often spins news to get clicks and views. At the end of the day, don’t fret—your Treadstone Loan Officer has your back and is here to keep you informed throughout the process and beyond.

The Truth Simplified

Let’s get to the bottom of this. Fannie Mae & Freddie Mac, the government-sponsored agencies that set many mortgage industry standards, have adjusted the existing ways that interest rates & loan fees are calculated.

Those changes will decrease fees for those with lower credit scores and increase fees for those with higher credit scores.

While that may sound daunting or unfair, there is no scenario where someone with a lower credit score will have a lower fee than someone with a higher credit score. Instead, the gap between what they pay is just smaller than it was before.

Why would the government do this? Fannie and Freddie’s “mission” is to accelerate affordable home ownership, and the changes to these fees reflect that goal.

Let’s Dive Into the Details of Loan Pricing & Fees

This blog from Mortgage News Daily explains the reality behind some new mortgage changes, and aims to dispel some misinformation in how the media is explaining things. It offers the nitty-gritty explanation for those who are interested, but gets to the bottom of things quickly for normal readers at the top!

Treadstone Has the Answers

Whatever questions you still have, Treadstone is here for you. Send us a message, or give your Loan Officer a call anytime.