FRESNO, Calif. (KFSN) -- An already difficult housing market is preparing for a Loan Level Price Adjustment that may make it even more challenging for some to buy a home.
"Someone with a higher credit score and a bigger down payment might be penalized in the interest rate, or pay more for that interest rate than someone that is putting less money and has a lower credit score," says Paul Salazar with Sierra Pacific Mortgage.
The program is designed to level the playing field and promote equitable access to home ownership.
Salazar says the new program does not help the struggling market.
"Basically, the person that's going to be hit the hardest is someone that has a FICO score between 680 and 780 plus and putting a lot more money down," he said.
For example, someone with a 780 FICO score who put 20% down on a $450,00 home would have to pay an additional $5,400 for a 7.625 interest rate.
"Now, the person that is going to benefit is someone that has a FICO score lower than 679,680 and putting 5% down," Salazar said.
In that case, someone with a 660 FICO score who put 5% down on that same home would pay a $1,200 fee for the same rate - saving about $3,000.
The program impacts conventional Fannie Mae and Freddie Mac loans.
Salazar adds it is important not to generalize this new program.
Each case must be handled on an individual basis because of their unique situations.
