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How credit score impacts current mortgage rates

Anyone trying to buy a house knows that the market has changed a lot over the past few months, including a recent change for those using a mortgage loan.

LITTLE ROCK, Ark. — Anyone trying to buy a house knows that the market has changed a lot over the past few months.

Another change came this month and it affects people using a mortgage loan.

Some of the viral headlines suggest buyers with higher credit scores will now pay a higher mortgage rate than those with lower scores.

However, that's not necessarily true.

While a new federal move to make home-buying more accessible is raising fees for some with good credit— there's a lot more to it.

Mark Philips is a senior mortgage banker at Flat Branch Home Loans, (NMLS 1759301) who stepped in to clear the air when social media posts started suggesting that good credit could be bad for mortgage fees.

"Fannie Mae and Freddie Mac are trying to make people with lower down payments... still have a chance out there in the market," Phillips said.

A chart of rates shows that the people most impacted are those with a fairly good credit score— more money down.

But even with the rate hike, those clients are still paying less overall than those with a bad credit score.

UALR economist Michael Pakko said this is just a part of a regular review process for the federal housing finance agency.

"What they've done is realigned the risk factors for borrowers with low versus high credit scores, and how much payment is on how much down payment there is on the home," Pakko said. "They're phasing in this program that has been really months long, comprehensive review of the risk factors."

Philips said there are ways to avoid the higher fees even with a higher credit score.

"You could structure that loan in a way where maybe you only put 5% down, take yourself out of that bracket," Phillips said. "Now you're in the positive bracket."


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