Ask Andy: Potential mortgage penalties - WMC Action News 5 - Memphis, Tennessee

Reported by Andy Wise

Ask Andy: Potential mortgage penalties

Hold off a second on buying that new house or that re-fi you were planning.

You may be facing a penalty.

My mortgage sources tell me Fannie Mae and Freddie Mac are trying to shore themselves up against default risks.  What this means is some folks who either haven't saved enough for a down payment or who have a certain credit score may be forced to save more cash, boost that score or face higher rates or pricing.

I'm told it is almost a given that you'll pay either a higher interest rate or a higher price on discount points if:

* You're buying a new home with a down payment of less than 15 percent, no matter what your credit score.

* You're buying a condo with less than 25% down.

* You're refinancing your home with less than 30 percent equity and a credit score below 700.  The increased rates or pricing on discount points may outweigh the savings you hoped for in the re-fi.

Talk to your mortgage lender about these potential penalties before you sign a loan or put the money down.

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