New loan level price adjustments by Fannie Mae will affect home buyers with both higher credit scores as well as those with lower credit scores. Who is being impacted the most by these LLPA’s? How will these llpa’s affect your interest rate to buy a house? Are good credit score buyers really paying for lower credit score buyers?  In this episode, we discuss how Fannie Mae’s new fee structure will impact your mortgage interest rate in 2023 to help you become The Educated HomeBuyer.

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Connect with me 👇 Jeb Smith (huntington beach Realtor/orange county real estate) DRE 01407449 Coldwell Banker Realty ➡I N S T A G R A M ➳ https://www.instagram.com/jebsmith ➡Y O U T U B E ➳https://www.youtube.com/c/JebSmith

Connect with me 👇 Josh Lewis (Huntington Beach Certified Mortgage Expert) DRE 01209148 Buywise Mortgage M:714-916-5727 E: josh@buywisemortgage.com ➡I N S T A G R A M ➳ https://www.instagram.com/borrowsmartjosh ➡Y O U T U B E ➳https://www.youtube.com/c/buywiseborrowsmart
📩 – info@theeducatedhomebuyer.com

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For Show Notes, See Below 👇

[00:00:00] Jeb Smith, Huntington Beach Realtor: At the moment, there’s a lot of talk about good credit score buyers subsidizing the cost for those with lower credit scores. So in today’s episode, we’re gonna talk about the new LLPAs. We’re gonna go into detail about where things were before, what they look like now, and how that might affect you as a home buyer in the 2023 housing market. So Josh, I think it’s important to start with a really basic definition of what is an LLPA. 

[00:00:29] Josh Lewis, Expert Mortgage Broker: It’s an acronym for a loan level price adjustment. And it’s a fancy way of saying risk based pricing. Historically, we’re gonna see today. It’s not that way now after these changes, but it has always been loans with higher levels of risk will pay an adjustment. It’s not a higher interest rate. It’s a fee due upon delivery of that loan from your lender. So they count for these in your interest rate. Most people don’t literally pay them out of pocket. 

Most people don’t understand Jeb. On any given day, there is a par rate that lender lenders would like to get on their loans. Once we account for these loan level price adjustments, different factors in the loan, it can make that be higher for one borrower versus another. So what has happened is the FHFA, the agency that runs or dictates to Fannie Mae and Freddie Mac what they’re going to do, has instructed them to change their loan level price adjustments. And what we’re going to see today is that it’s not just risk-based pricing, and it’s not just risk adjusters. And what do we mean by risk adjusters? What are elements of a loan file that can be additional risk to the lender?

Obvious one is lower credit score. Lower credit scores default at a higher rate. Default is a risk to a lender. Another factor, higher loan to value. The less money you have in the property the more likely you are to lose the property. That piece is not a hundred percent true, but the less you put down, the bigger the loss severity there is to the lender. So additional risk there. 

Property type can be an additional risk. There’s a loan level price adjustment for a condo if you’re putting less than 25% down versus a single family residence. If you’re buying a four unit building, loan level price adjustment versus a single family residence. 

We have loan type. Fixed rate versus an adjustable rate. We also have occupancy. Everyone knows this. If you wanna buy an investment property, it’s gonna be a higher interest rate than if you buy an owner occupied home. We have loan level price price adjustments for cash out. That’s a little bit of additional risk to a lender, someone looking to get money out of their home. We’re not sure why they need it. So over time, it’s proven that there is an additional level of risk there. 

Debt to income, Jeb, we’re not even gonna go into today because they’ve kicked the can down the road until August. Debt to income has never had a low level price adjustment applied to it. It was part of these changes. The industry has basically said that’s not practical in real terms, and we’ll probably end up doing another episode about that in the future if those stay in place. But right now they’ve been pushed off till at [00:03:00] least August. So that’s what a loan level price adjustment is.

That’s why we are here today. A little bit of a history lesson, Jeb. Everyone knows that Fannie and Freddie got a bailout after the 2008 meltdown. The bailout was to the tune of about $187 billion. And what FHFA director Sandra Thompson is trying to say now is we have to make sure that the agencies, Fannie and Freddie are well capitalized, so they never need a bailout again.

But it ignores the fact that they’ve paid back over $300 billion to the government since then. And that was in, in 2019, the number was over $300 billion. She’s stating that both agencies are under capitalized. If we had another downturn in the economy, they don’t have enough money. Yeah, they don’t have enough money because the government stole the additional $130 billion in profit, just through 2019, that would be there as a backstop for this. 

So our old loan level price adjustments would’ve allowed them to recapture all the losses and put away $140 billion for a rainy day. We can all agree that we want Fannie and Freddie to be solvent. We don’t want taxpayer bailouts, but that is not in any way what this is about. Despite what they’re trying to say it is about today. 

[00:04:13] Jeb Smith, Huntington Beach Realtor: All right, so let’s talk about a couple of the headlines and see if we can clear up some of the craziness out there. One of the headlines reads how the US Is “Subsidizing High Risk Home Buyers At The Cost of Those With Good Credit”. That came from the New York post.

And then on the other side you have “Biden Raises Costs for Home Buyers With Good Credit to Help Risky Borrowers” that came from Newsweek. So the question, Josh, is does this new structure penalize borrowers with good credit and larger down payments? And at the same time, is it rewarding borrowers with bad credit and lower down payments?

So I know that’s a, you know, can be a bit confusing with all of the good credit, bad credit. But in reality, what I’m asking is, are the headlines actually true? Are good credit borrowers now subsidizing this cost for lower credit borrowers? 

[00:05:01] Josh Lewis, Expert Mortgage Broker: In practical terms, the answer’s gonna be no.

We’re gonna go through an example. This basically is pushing the lower credit score borrowers and some of the higher credit score borrowers over to FHA when it’s a lower down payment. So there is a group of borrowers who are going to be paying more, and those people are those with credit scores from 680 to about 740. 

Before we used to tell borrowers that the best tier you could get to is 740. If you have a 741, you’re gonna get the same terms as someone with an 800 credit score. That’s no longer true. We created with these changes two additional tiers. And reasonable people can debate this. Do we need to have tiers above 740? 

Yeah, there is some more risk to a 740 borrower than there is to an 800 borrower. But now that we have that tier of 780 and above, No change to them. If anything, a couple of the tiers and certain down payments got better for people with a 780 and above, but for those people in that group from 680 to 740 I’m just [00:06:00] looking at the chart here. It’s anywhere from an eighth, worse to three quarters of point in fee. 

So in reality, that’s gonna translate to an eighth of a percent an interest rate to three eighths of a percent interest rate on any given day. So if we look at the chart, the only people that are impacted by this, Are again borrowers with a 680 up to a 780, so 779 and less than 30% down all the way up to 5% down.

Strangely, every borrower, even the best credit score, if you’re putting 3% down, you saw an improvement to the terms. So it goes back. FHFA director Sandra Thompson, put out a press release to counter the misinformation. And for me, I struggle with this. When your government basically puts out a piece of propaganda to correct misinformation, it’s hard to accept.

We’re saying that we’re improving pricing for everyone with less down, but that all of these changes are supported by risk-based decisions. That can’t be true. The smallest possible down payment can’t have the least risk. We can’t need to improve that while worsening other terms. And when we go into a couple of these examples, you’ll see we’ve heard. The piece of people with worse credit are better off with those, with better credit. 

People with a bigger down payment are worse off than those with a smaller down payment. And there’s an element of truth to that. But in practical terms, Fannie and Freddie If you have less than 25 or 30% down are a really difficult option for anyone with less than a 680 credit score.

And we’ll detail that. And if you’re watching this on YouTube, we’ll throw this chart up on the screen. But at home it’s really important to look most of the 81 cells in this chart. So 81 different groups based off of loan to value and credit score. It looks like only about less than 25 of them are worse. The important part is the relative differences. Everyone with low credit scores has got much better terms versus the old chart. 

[00:08:08] Jeb Smith, Huntington Beach Realtor: Yeah. Here’s the part I struggle with, Josh, they say that the people with lower credit are getting improved rates. And they are. They’re saying the people with good credit, we’re talking that kind of, that middle tier that you mentioned, 680 to 740, 779, whatever are gonna be impacted a little bit more and they’re gonna pay a little bit more on the rate.

But here, in all reality, I’m looking at the sheet that you’re looking at, and you and I haven’t had this conversation, but when I see, okay, there’s an eighth of a percent hit to the fee under a 780 in, so in between, you know, what is it? 760 to 779 and you put just over 20% down, you’re getting an eighth of a fee less.

What does that actually translate to in your interest rate? Are you going to get a significantly worse interest rate or are we talking really minimal here? Because and I’m not trying to downplay it, I’m just [00:09:00] asking a question cuz most people listening to this don’t really care how it affects everyone else. They care how it affects them. And so when we’re talking an eighth of a percent to the fee or a half a percent hit to the fee, what does that actually mean when we’re talking interest rate, when we’re ultimately talking payment? 

[00:09:17] Josh Lewis, Expert Mortgage Broker: So this is similar to paying points. We go through the rule of thumb in a normal market, your rate sheet, if you go up in interest rate a quarter of a percent, that’s a point difference in fee. So one eighth is less than an eighth. It’s not a one to one, it’s about a four to one. So if we’re saying it, it’s easier to take an example of here from 740 to 759, putting 10% down, they’re gonna pay a half point in fee worse.

A half point is generally an eighth of a percent in interest rate, one point in fee is a quarter percent difference in interest rate. Most of these are down at an eighth, so it’s well, less than an eighth of a percent in interest, but it’s real 

[00:09:57] Jeb Smith, Huntington Beach Realtor: money. No, it is. Yeah. Especially if you’re a higher loan amount, it’s going to have a bigger impact, but I think in hearing this, most people ultimately, they get defensive. They think, God, you know, this whole thing has changed. Now I’m getting screwed because of x. And yes, and maybe in a, in some ways you are, but it’s not as crazy in my opinion, as the media makes it out to be. 

[00:10:18] Josh Lewis, Expert Mortgage Broker: The biggest misconception that is out there is that, Hey, I should wreck my credit score so I can get better terms. That is not the case. The people with worse credit have had big improvements. The people with good credit, for the most part, have had things worse for them. That does not mean that they are paying more than the people with bad credit. They still get better terms. Just we have narrowed that gap significantly between the terms that people with really good scores were getting and the people with moderate or mediocre credit scores are getting.

So that’s the most important thing that I want you to understand. Lowering your credit score is not going to get you better terms. Your neighbor with a 660 credit score is not getting better terms than you. He’s getting much better than he used to get, but he is not getting as good as what you are getting and that message is getting lost in the headlines.

You know, and Jeb, another piece that I want to say about this, we wanna make everything political. You saw one of those headlines as Biden does this, I don’t know if Biden knows anything about this. You know, there’s other things that they’re worried on and thinking of. But when the FHFA was created post 2008, it was written in a way that the FHFA director was appointed and was accountable to no one. Could not lose their job for almost any reason. 

During the Trump administration that was litigated all the way to the Supreme Court says that’s not constitutional. So now, We have a situation where the FHFA director works at the president’s leisure President can hire on fire for any reason.

So Trump got to name Mark Calabria president, or head of the FHFA, and he had some crazy ideas and we saw crazy headlines. Trump is taxing refinances and was it true? Yeah. He appointed Calabria and Calabria increased loan level price [00:12:00] adjustments or delivery fees on refinances at that time, and no one liked it.

So he had an agenda that he didn’t want Fannie and Freddie to exist. So that was a right wing agenda. Okay, now we have a left wing agenda of saying we would like to subsidize lower credit score borrowers. And if you go, this is again, the misinformation, you say, that’s not what we do. Our charter is to help low income, not low credit people, but income is nowhere on this matrix.

And yet we see all of the lower down payment and lower credit scores have the biggest benefit of this. No one should debate or argue that we should do everything we can within a safe home finance system to enable or incentivize or subsidize low income borrowers if they can affordably and sustainably buy a home.

So we go back, Jeb, you’ve heard me talk way back in the nineties, both parties, Republicans and Democrats thought housing was great. We have, less crime, we have better families where home ownership is higher. So they incentivized it at all cost thinking that being a homeowner led to all of those other things versus all of those other things leading to home ownership.

You can’t just incentivize home ownership and think that we’re changing people. What we want to do is make the barriers as low as possible for those who can successfully become homeowners. Cuz as we talk about a million times on the show, Jeb, 44 times greater net worth of homeowners than non homeowners.

So if a blue collar, lower income American, we can get them in with zero down and they have a 740 credit score and they’ve shown they’re a good risk and the debt to income makes sense for their family. We should incentivize that. And if that means everyone pays a little higher tax to help those lower, and when I say a tax, these loan level prices essentially are a tax on you getting your mortgage. I think we should all be in favor of that. 

But when we’re talking about incentivizing Lower credit scores. It’s a little bit silly. And we’re looking at a situation here where there’s things that don’t make sense. So an example on this chart, if we look for a borrower with a 720 credit score, if they make a 10% down, they’re hit to the loan level Price adjustment got a half point worse. If they make a 15% down, it got 0.75 worse. 

Why would you make any disincentive to any borrower to put more money down? Like the, these things don’t make sense. And this is what I like to say is an insurance company can show you actuarial tables that says you are a smoker and you’re a long haul truck driver. You could get in a car accident or you could have a heart attack from being sedentary, sitting in a chair, driving around the country all day smoking. 

And you go, okay, I get it. That’s why I need to pay more. They say, they’ve done a thorough analysis here, and these are all valid and justified risk-based adjustments, but logic tells you they’re not. And then when someone doesn’t show you their work of how they arrived at those numbers, then you can say for certain that it is [00:15:00] not what they are telling you it is. 

[00:15:01] Jeb Smith, Huntington Beach Realtor: No. Understood. So you said something earlier in the episode where if you have, below a certain credit score, I don’t even know that you mentioned credit score.

You and I have had that conversation off camera. But it’s gonna push more borrowers to go FHA. And something I wanna talk about here for a moment, because, the headlines make it seem like if I have lower credit scores, then I’m getting a better interest rate, better terms.

And we’ve clarified that is true here. You’re not necessarily getting a great deal, but you’re getting better terms than you would have otherwise. So why are we pushing more people to FHA if conventional rates are in theory improving at those lower credit scores? Because many listeners out there, many people getting loans often think of an FHA loan as those putting minimal down those with lower credit scores, and neither of those necessarily have to be true, which we’re going to talk about here in just a minute.

But why are we now going to see more people say FHA is the direction I’m going to go, even though we’ve seen rates improve at the lower credit scores. 

[00:16:11] Josh Lewis, Expert Mortgage Broker: So we’re talking about conventional loans here. Let’s do the conventional example to give us a baseline. And then show the difference to FHA, so you can understand why even high credit score borrowers with low down payments are getting pushed towards FHA.

So here are some of the craziness that I want to point out. So I wanted to use two examples here. 740, which was previously the highest tier, best credit available, and now it’s towards the higher end, but You know, 50, 60 points away from the highest tier and compare that to a 660. We always say that if you’re under 680, conventional has always been expensive.

It’s less expensive now, but it is still expensive. So I ran these numbers just this morning. We’re only looking at the relative difference. If you listen to this in three months, these numbers could be very different. Rates could be higher or lower. But as of today with zero points, a 740 borrower putting 3% down is looking at 6.375.

So you go, okay, I’m hearing these changes. If I have a worse credit score, I get better terms. Right? No, the 660 credit score borrower, we’re putting 3% down this morning is at 6.99 when you add up all their loan level price adjustments, which are less than what they were under the old regime. 

They’re still significantly higher than the 740 credit score borrower, so they’re paying five eights higher in interest rate. But here’s where the kicker comes in, that 3% down 740 score, borrower has a mortgage insurance of 0.74, so just a little over 7% combined between their interest rate and their mortgage insurance.

Now, the 660 borrower, not only do they have a 6.99 call it a 7% interest rate, they have a 2.04% mortgage insurance, so it’s 9% effective rate. So hopefully you’re seeing why tanking your credit score following the news and the headlines is not a good idea, not a good idea in any way, shape or form. 

[00:17:55] Jeb Smith, Huntington Beach Realtor: So when I didn’t pay my mortgage payment this month, that wasn’t a good idea. I was trying to get,

[00:17:59] Josh Lewis, Expert Mortgage Broker: it’s not gonna help [00:18:00] you get better terms on your next loan. 

[00:18:02] Jeb Smith, Huntington Beach Realtor: Josh, wish I would’ve known, I wish I would’ve done this episode prior. No. So that’s a really good example now. I mean that, that’s a big example. Josh. We’re talking 2% difference in effective rate in, in just 60 what, 80 points of credit score.

And I don’t know if you guys have heard us say this before, if you’re in a position at the moment, I know we’re going a little off track here, Josh, I’ll get back to you in a minute with with where we’re going. But if you’re in a position right now, you’re thinking of buying, you’re not really sure if you’re ready, home ownerships in your future.

And you have less than a 740 credit score, work on your credit. Credit impacts your interest rate more than anything else, more than down payment. More than anything. Having good credit is really the best way to get the best rate and terms all day, every day. So don’t pay attention to the media about tanking your credit to get better fees, better rates better, whatever. Work on your credit score. 

So Josh, you gave an example at a 740 and a 660. I’m not sure if we’re going down other down payment options there, but it will be really interesting to see how it compares FHA. 

[00:19:06] Josh Lewis, Expert Mortgage Broker: Before we go to FHA, the only other one I wanna show is the difference between three and 5%, because five percent’s less risky to the lender, right? You have a little more skin in the game. 

[00:19:14] Jeb Smith, Huntington Beach Realtor: You’re a higher risk if put more money down, Josh. 

[00:19:16] Josh Lewis, Expert Mortgage Broker: Okay. Both of these options pay an eight of a percent higher in interest rate if they do 5% down versus 3%. So I, this is basic math. A 10 year old, if you ask them, Hey price risk, they wouldn’t do this. There’s no world in which you make pricing worse at 5% down than 3% down.

So it’s equal. 740 and 660 both see the same thing. And the response from the FHFA was you’re not accounting for mortgage insurance. So if we account for the mortgage insurance, it does drop, it drops a chunk from 3% to 5%. For the good borrower, it drops down to 0.5%, so 6.49 and 0.5%, 6.99 versus 6.35 and 0.74, which is just over 7%.

So essentially those borrowers are paying the same, the monthly payment is within about $20 of each other, but that is irrelevant. It would be like the car dealer saying, Hey, we sell cars to people with a bad driving record for less because they have to pay more in insurance cuz they get in accidents and they get a lot of tickets. That’s crazy. 

That mortgage insurance does not help Fannie or Freddie at all from one loan to the other and what that rate is that’s being paid. The loan is insured by the insurer one way or the other. So the rate and the effective rate the borrower pays is irrelevant. Now for that lower credit score borrower, it’s an even bigger difference cuz the mortgage insurance drops from 2.04 to 1.48. 

So you’re in a much better position if you can get to 5% down. But now Jeb, you’ve been asking the important question, if you had 5% down and a 660 credit score, you don’t want to do FHA, right? Because I’ve got more than the minimum three and a half percent down.

Now I don’t even need to tell you the 740, cuz the 740 borrower and the 660 borrower are essentially going to pay the exact same [00:21:00] interest rate on an FHA. As of this morning, zero points is about five and a half. Both of them are gonna pay 0.55% mortgage insurance, so they’re just a hair over 6% when we’re talking depending on your credit score, 7% to 9%. 

The payments are monstrously different. The 740 credit score borrower that has a $308 a month savings versus a 3% conventional or an FHA, that’s for the 740 borrower. If we drop down to the 660 borrower, that five and a half with a 0.5 is a $3,017 principle and interest plus mortgage insurance. So no taxes, no insurance. $500,000 purchase. 

It’s $4,048 on a 3% down conventional. So all of the bottom of the LLPA chart, that’s green, that it’s improved. It’s better. We’re subsidizing, we’re incentivizing these people. No, we are not. No one is going to take that loan.

Every one of those borrowers are gonna say, FHA please. I will go that route. So all we’ve done is taken, if our goal was to subsidize these people, what we’re doing is we’re maximizing profits for Fannie and Freddie because we’re charging the good borrowers more, and we just ran all of the less good borrowers over to FHA and put that risk onto FHA’s books, which is also the government last time I checked.. 

[00:22:17] Jeb Smith, Huntington Beach Realtor: No, also great information. You know, Josh, a lot of people are listening to this and seeing the headlines and seeing that all of this effective pricing started as of May 1st. You and I have talked about this, in different capacity, how the pricing that was effective as of May 1st, which was just a couple of days ago, has essentially been effective for the last 30 plus days.

Because, all of these lenders knew this adjustment was coming. Therefore, they went ahead and adjusted their rate sheets the fee structure on their rate sheets to essentially have the pricing already built in. So if you’ve been in the market, Getting quoted interest rates for the last 30 plus days.

What you’ve been quoted has essentially been, all of this stuff that we’ve talked about today has been priced in. And at the same time, if you’re a borrower out there and you’re thinking of going conventional, and your lender hasn’t given you a side by side comparison with FHA, even if you don’t think you’re an FHA buyer, if they haven’t done it, ask them for it.

And if they’re not willing to do it, talk to another lender. You just wanna see the payments side by side. Look at the pros and cons and understand which loan is right for you. Right? There’s a lot of misinformation out there about different loan programs, why they’re good, why they’re bad, why you shouldn’t do them, when in all reality people do things for different reasons. 

And ultimately in my experience, most people care about the payment more than anything else. So if there’s a way for you to take a lower payment and maybe even put less money down in some ways and get an effectively better rate, term, fees, everything else, then maybe [00:24:00] that’s the way you should go.

So Josh, I’m assuming in conversations today, you’re talking to conventional buyers. Doing side by sides. What are you seeing out there with people that are getting affected with, putting a little bit more money down? 

[00:24:12] Josh Lewis, Expert Mortgage Broker: Jeb, let’s use a great example, A friend of yours that you referred over, he’s actually buying in another market so you aren’t able to help him, so you’re not part of the transaction. But we did this side by side comparison. They could do three or 5%, they could do 10% down, but they only wanted to do three to 5% down. 

So we penciled out for them the FHA, a 3% conventional and a 5% conventional. And for them, the decision was obvious. They have high 700 credit scores, low 800 very good credit scores.

They were gonna hit the highest tier on any of these charts, and they looked at it and they go, “Why wouldn’t I do FHA? It’s a couple hundred dollars lower a month in monthly payment.” Said the only reason why you would be steered away from FHA is FHA does have an upfront mortgage insurance premium.

So you’re gonna put 3.5% down. They’re gonna put 1.75 back on your loan. Other than that, there’s absolutely no reason why not. And here’s the funny part, Jeb. They went out, they bought a house. And that seller countered that they wouldn’t accept FHA financing. Don’t wanna bore you with the details of why, but we ended up having to go back and we looked at the three and the 5% conventional.

The terms were better for them on the 3%. Their mortgage insurance was slightly worse at 3%, but it was way less cash. Super similar payments. We ended up doing a 3% down conventional. So the big picture that you should take away from that. That’s what your loan officer should be doing. You have option A, B, and C.

Never is there one that that’s the right decision? It’s, here’s the pros of this one. Here’s the pros of this one. Here’s the pros of this one. Here’s the cons of any option or any downside, and you weigh them and determine what is the best option for you and your family. Because I can have a feeling numerically, Hey, the math says this is it. You know your situation better than anyone else.

[00:25:51] Jeb Smith, Huntington Beach Realtor: No. And that’s good. And so if you’re out there searching. Wanna talk to a lender, there’s a link in the description below where you can get in touch with someone anywhere in the country that will guide you through that process. So make sure you’re reaching out if you know, are wondering differences, FHA versus conventional. We gave some very minor examples here, rates a little bit better. Mortgage insurance is a little bit better in certain tiers of credit with FHA, but what else? What are the pros and cons of each? We did an episode, just a couple episodes back where we actually discuss FHA versus conventional to help guide you through that process.

So make sure you go check that out. In the meantime, we’re here to continue to answer any questions, so make sure you’re reaching out. A lot of the episodes come from questions that you guys have, so be sure to reach out if you have questions. And if there’s an episode you want to hear cuz we’ll probably do it.

But with that said, Josh, any parting words today? 

[00:26:42] Josh Lewis, Expert Mortgage Broker: We are in a weird era. We’ve seen two pieces of social media just catching fire here recently. The one a month ago, Jeb was a TV station out in Arizona, ran a spot with a local mortgage broker that FHA was doing 40 year mortgages.

We’d been asked this question 9,000 [00:27:00] times on the live and said, it is for modifications only. It is very clear that it is not for new loans. That caught fire and you saw 50 different places run with it. FHA offers 40 year loans. Is this the apocalypse? Is this the greatest thing for buyers? And it took about two weeks for it to die down and people understand. Fake news.

Right? Now we have this situation where we have literally the government putting out press releases, fighting misinformation, which to a degree we talked about, it is misinformation. The headline that all of our borrowers are taking away from this is, I am going to pay a higher rate for having better credit and a bigger down payment.

You aren’t. You’re gonna pay more than what you would’ve under the old system, but you are still gonna be a much better position than someone with lower credit. Just consider your news sources. If something sounds crazy or doesn’t make sense, I’ve probably had 20 borrowers reach out and ask about this.

And we go through a five minute conversation. They go, okay, cool. I was super nervous or worried, or I was up in arms. I was throwing things at the Fox News Channel on the tv. And you’re like, it doesn’t it. There’s always simple truth. And in the mortgage arena, hopefully we’re your trusted advisors for that.

And you can come and ask us, shoot us an email, make a call. But if it’s in another arena, just know that the media is there to just get you fired up and spin things. Most times it’s not as crazy as it sounds. I don’t love this. I don’t agree with it. But it is not nearly as bad as what the media has made it out to be.

[00:28:21] Jeb Smith, Huntington Beach Realtor: So hopefully that helps you become The Educated Homebuyer. Until next time, Adios! 

[00:28:26] Josh Lewis, Expert Mortgage Broker: And Vaya con Dios.

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